KKR's Kravis now want to imitate Buffett and BRK

[netnet]

This falls into the Munger's mental model of...envy.

In a N.Y. Times Blog, which quotes a Business Week article, KKR's Kravis says that    Buffett "'can make any kind of investment he wants,” ...And he never has to raise money'

Mr. Kravis thinks Mr. Buffett’s cash-rich conglomerate Berkshire Hathaway represents 'the perfect private equity model,' the magazine said, in a lengthy look at Mr. Kravis and his buyout shop."


The N.Y Times article: http://dealbook.blogs.nytimes.com/2009/12/11/kravis-wants-to-rock-it-like-buffett/

The BusinessWeek (original) http://www.businessweek.com/magazine/content/09_51/b4160038935523.htm

I find the irony pretty amusing.

Best,

Netnet

[Xerxes]

Couldn't find a KKR thread. So, i'll post it here.
If Moderators could be kind enough to "move" this thread to the "investment topics" basket .. and re-name it as KKR, that would be awesome.

Here is a great 45 min long with Mr. Kravis from KKR. Seems like a passionate person. I like that. I had listened to interviews with the head of Apollo Management, i did not like the guy. But Mr. Kravis seem like my kind of a leader, based on the optics.

Interview is great.

https://www.bloomberg.com/news/articles/2020-10-30/kravis-says-the-market-is-wilder-than-at-any-time-in-his-career

I don't follow the name closely. Found out in the interview that KKR had recently (July 2020) bought Global Atlantic with its own balance sheet to add to its 'permanent capital'. i.e. not an investment through its funds. Interesting both KKR and BAM are going there in the insurance space.

Looking at the post from 2009 that started this thread, it is interesting to see that Kravis had this Berkshire "permanent capital" in the back of his mind for a long time. Perhaps it is time for me to read the long over due "Barbarian at the Gates", not that it helps with today's KKR, but i like to read on company's DNAs.

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https://www.bnnbloomberg.ca/kkr-to-buy-global-atlantic-adding-almost-90-billion-in-assets-1.1462201

(Bloomberg) -- KKR & Co. agreed to buy Global Atlantic Financial Group in a deal that gives it a major presence in the insurance industry and adds long-term capital.
The alternative-investment manager will acquire Global Atlantic’s outstanding shares, according to a statement released Wednesday, in a transaction that could be valued at more than $4 billion. Global Atlantic, which was founded within Goldman Sachs Group Inc. in 2004 and became independent in 2013, had more than 2 million policyholders through its retirement and life insurance products and almost $90 billion in assets as of March 31.
KKR’s rivals have been building out their own insurance arms in recent years and have brought on executives who can help them attract more business. Insurers are facing historically low yields in fixed-income markets. Apollo Global Management Inc. helped turn annuity seller Athene Holding Ltd. into a business with a market value of $5.8 billion, and funds affiliated with Blackstone Group Inc. teamed up with other investors in 2017 to buy Fidelity & Guaranty Life.
“This is a transformative event for KKR,” said Henry Kravis and George Roberts, co-chief executive officers of the New York-based firm. “Our businesses are complementary and our partnership will benefit all of our collective stakeholders.”
KKR will pay the insurer’s book value at the date of closing, subject to an “equity roll-over” for certain existing shareholders, according to the statement. Global Atlantic’s book value was about $4.4 billion at the end of March.

‘Permanent Capital’

The purchase is expected to be completed in early 2021. Global Atlantic will then operate as a separate business with its current management team, headed by CEO Allan Levine.
KKR already manages $26 billion of assets on behalf of insurers. The deal also increases what private equity firms refer to as “permanent capital,” coveted funds they don’t have to give back to investors in a few years.
Global Atlantic offers annuities for individuals through banks, broker-dealers and insurance agencies as well as life insurance. The company is also in the reinsurance business for life and annuity clients.
KKR expects to fund the acquisition, net of the equity roll-over, from a combination of cash, proceeds from potential minority co-investors and the issuance of new debt or equity.

[Viking]

Hey, if everyone wants to own an insurance company right now perhaps someone can introduce Prem to Flatt. Imagine FFH investments managed by Brookfield :-) Just think what kind of value that pairing could create for Fairfax shareholders over the next 5-10 years from todays price :-)

[Xerxes]

Prem won’t sell unless he has chance to do both of the following: (1) sell at a huge premium (2) and as part of that to be able to close his last chapter and right the ship (ie his legacy).

That said the Oaktree model is plausible. With minority selling out and him keeping his 10% or so. But then again he sees himself as a capital allocator than an insurance guru. 10 years from now maybe. Not now though. For now he set in his mind to prove his naysayers that he is right.

It is interesting to think where Brookfield was 10 years ago and what powerhouse it has become and the size of its ambitions.

[Cardboard]

I would be really careful with Brookfield.

This is spaghetti like structure with leverage at rates that would disappear at existing terms on any sign of trouble in financial markets.

I recall the days of Edper Brascan, big conglomerate discount, hate by market for holding things like Noranda. Now it holds office buildings, hyped up renewable infrastructure, soon 100% of Genworth or mortgage loan insurer in biggest bubble ever in Canada or overtaking Nortel, JDS Uniphase, etc.

When you hear can't lose stocks by fund managers you gotta to pay attention.

Cardboard

[scorpioncapital]

Perhaps we are all wrong but it's possible the next shoe to drop will be massively jacked up interest rates and then game over for a lot of debt-model business model players - including governments. I wonder if this will happen in our lifetime.

[DooDiligence]

Perhaps we are all wrong but it's possible the next shoe to drop will be massively jacked up interest rates and then game over for a lot of debt-model business model players - including governments. I wonder if this will happen in our lifetime.

I just read this on the Balance.

www.thebalance.com/what-is-stagflation-3305964

I'm not informed enough to know if the conclusions the author draws are correct, particularly with regards to these statements:

"The unusual conditions that created stagflation in the 1970s are unlikely to reoccur."

"First, the Fed no longer practices stop-go monetary policies. Instead, it commits to a consistent direction. Second, the removal of the dollar from the gold standard was a once-in-a-lifetime event. Third, the wage-price controls that constrained supply wouldn't even be considered today."

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The article seems to provide enough citations to at least provoke intelligent dissenting opinions.