KKR CFO Discusses Strategy, Growth, and Arctos Acquisition at BofA 2026 Financial Services Conference

Key Takeaways

TL;DR: KKR enters 2026 w/ strong momentum: industry-leading operating leverage, robust AUM growth, and high confidence in beating key profitability targets ($4.50+ FRE, $7+ adjusted net income/sh). Arctos deal to drive $100B+ AUM secondaries/GP solutions platform, closing a major product gap. KKR expects a constructive 2026 cap markets env., w/ increased deployment & monetization, especially in infra, Asia, and asset-based finance. PE and RE remain growth areas, w/ KKR gaining share on scale & performance. Strategic focus: scaling core strengths, integrating Arctos, expanding insurance & private wealth. Software/AI exposure is measured & below peers; KKR stresses discipline in tech investing.

1. Biz Model & Segment Overview

• Three synergistic businesses: Asset management ($740B+ AUM), Insurance (Global Atlantic, $220B AUM), Strategic Holdings.
  • Asset management: Core, diversified across PE, real assets (infra/RE), credit. Each ⅓ of 2025 management fees ($4B+ total).
  • Insurance: Global Atlantic AUM up from $72B (2019) to $220B (2026). 3rd-party insurance AUM >$80B, up from $25B in 5 yrs.
  • Strategic Holdings: LT compounding CF businesses, sourced via Asset management, high margin accretion (no dedicated HC).
• Operating leverage:
  • FRE margin: Industry-leading, mid-60s% sustainable, recently high-60s%.
  • Management fee growth (2023-25): +50%; operating expense growth: <25%. Peers have inverse ratio.
  • Quote: “If we're successful in executing on our vision, we'll grow revenue at a pace far exceeding HC growth and operating complexity.”

2. Arctos Acquisition & Secondaries Platform

• Arctos: acquisition Feb 2026; $15B AUM ($10B fee-paying). World leader in sports team stakes via perm. cap structures; double-digit growth expected in sports asset class.
• GP Solutions: Top player in growth/liquidity for other alt mgrs; large addressable market.
• Secondaries: Fills major product gap; Arctos team brings deep secondaries expertise. KKR aims for $100B+ AUM secondaries/GP solutions biz.
  • Quote: “If we did not think that, we wouldn't have done the transaction.”
  • Integration: Ian Charles (Arctos co-founder) to run new KKR secondaries unit; KKR prefers to build from scratch, leveraging innovation & KKR/Arctos synergies.

3. Macro & Capital markets Outlook (2026)

• Constructive 2026 expected:
  • M&A and IPO activity to accelerate
  • Fed rate cuts possible
  • KKR expects more deployment & monetization, supporting higher earnings
  • Quote: “2026 will be a constructive year in cap markets... more deployment... more monetization.”

4. PE & RE Update

• PE:
  • 2025 fee-paying AUM growth: +26% YoY; >2x in 5 yrs.
  • Market share gains expected as clients consolidate w/ top performers.
  • Not a low-growth biz for KKR; only ~⅓ of management fees.
• RE:
  • Platform size: $85B AUM (50/50 equity/debt).
  • Returns strong; cap raising remains tough but expected to recover.
  • Japan: Recent accretive acquisition; key growth market.
  • Insurance channel: KKR invested in core RE on unlevered basis 18 mos ago, capitalizing on low competition.

5. Guidance & Profitability Targets

• 2026 Guidance (reaffirmed):
  • FRE/sh: $4.50+ (target set 2024, LTM FRE/sh $2.55)
  • After-tax adjusted net income/sh: $7+
  • Insurance operating earnings: ~$1B
  • Strategic Holdings operating earnings: $350M+
  • Embedded BS gains: $18.6B (+19% YoY)
  • Monetization visibility: $900M+ at start of 2026 (vs. $400M prior yr)
  • Quote: “We feel really good about meaningfully exceeding the $4.50 target... and $7-plus per share of adjusted net income”

6. Deployment Strategy & Growth Areas