KKR wants to expand its reach among retail investors in a market that presents an “immense opportunity” for the firm.
The New York-headquartered private equity giant has, over the last 12 months, doubled the size of its sales team focused on individual investors, said Scott Nuttall, co-president and co-chief operating officer of KKR, during the firm’s Investor Day 2021 on Tuesday.
“You should expect that team to continue to grow,” he added.
“What we are doing now is starting to invest in our sales team focused on individuals. That’s an opportunity that we think will play out over the course of the next several years that will sustain us for decades to come. [A] big opportunity for us going forward,” Nuttall said.
He added that the firm has “just begun to scratch the surface in this space” as individual investors remain under-allocated to alternative asset classes.
Of the $279 trillion of total potential client assets in the world as of last year, 64 percent, or $179 trillion, comes from individual investors, yet less than 5 percent of individual investors’ assets are in alternatives, Nuttall pointed out during the presentation.
“We believe that number will go up over time… and we believe we will be able to increase that number and participate in that to a great extent.”
Nuttall also noted that the firm is creating more products that are tailored to individual investors in both in registered and non-registered formats.
In March KKR invested in online fundraising giant iCapital and offered accredited investors on the fintech platform access to its portfolio of private markets strategies.
Last year was a record fundraising period for the firm in which it raised $44 billion across strategies – a 72 percent increase compared with 2019 inflows. Nuttall said during the call that between 10 percent and 20 percent of capital raised over the last several quarters had come from individual investors.
KKR wants to raise more than $100 billion of new capital commitments over the next two years, according to its Investor Day presentation materials. Almost half that figure is expected to come from private equity fundraising, up to $20 billion in infrastructure, up to $15 billion in real estate and up to $25 billion in credit.
“We have many more strategies coming to market now than we did at the beginning of 2020. There are 23 different fundraisings and strategies that are in market or coming to market shortly over the course of 2021 and 2022,” Nuttall said.
KKR is in market with its 13th North America focused fund, which has an initial target of $14 billion, as well as its second healthcare growth fund which had an initial set of closes on $2.8 billion.
In the next 12 to 18 months, the firm expects to begin raising capital for its sixth Europe buyout fund, its third growth tech fund, its inaugural Asia growth tech fund and its sophomore impact vehicle, said Joe Bae, co-president and co-COO on the call.