KKR’s Roberts: ‘That’s why we jumped off the pier’

Industry titan George Roberts, in a video with Goldman Sachs, shared lessons on more than four decades in private equity, career advice and pandemic opportunities.

George Roberts, co-founder and co-chief executive of buyout group KKR, has shared what he and co-founders Jerome Kohlberg and Henry Kravis wanted to accomplish by establishing the firm almost five decades ago.

“We started with $120,000 of capital. $100,000 was Jerry’s and $10,000 was Henry and mine, so we were just trying to survive. That’s really how we got started,” Roberts said in a video with Goldman Sachs, released Thursday.

“The basis for starting KKR is we wanted to work for ourselves and we wanted to build something that was different…that’s why we jumped off the pier and decided, ‘let’s see what that’s like.’”

More than 40 years later, that decision has paid off and then some. KKR is today a publicly-traded corporation with assets under management of $222 billion as of end-June and expects Asia to be as big as its North America franchise in the coming years. The firm ranked third globally in the latest PEI 300, having raised $54.8 billion between January 2015 and April 2020.

In the video, Roberts also noted some lessons learned from the firm’s $25 billion takeover of RJR Nabisco in 1988, regarded as the largest buyout at that time. Citing a quote used in the opening of the film The Big Short, Roberts said it was about “what you know that ain’t so that will get you in trouble”. KKR at that time spent a of lot of time analysing the elasticity of the tobacco industry and experts concluded that there was no way Philip Morris would ever reduce the price of Marlboro, but they did, said Roberts.

“When we exited the company, it was more profitable…We didn’t make any money. But we would still live to fight another day.”

He also talked about investors’ responsibility to address the opportunity gap in the US by creating opportunities for minorities and “getting their foot in the door”.

KKR has been on the offensive since the covid-19 pandemic began and has gone after opportunities across private equity, infrastructure and credit by leveraging its balance sheet and capital markets to invest, Roberts said.

The firm has been the most acquisitive among PE firms from March to July, securing 17 deals collectively worth more than $10 billion, according to data from S&P Global Market Intelligence data, which recorded announced and closed deals during the period.