takOkay, good morning, everyone. We'll get started with our next session. It is my pleasure to introduce Scott Nuttall, Co-CEO of KKR. With over $720 billion in assets under management, KKR is one of the largest and fastest-growing global alternative asset managers across private equity, real assets, and private credit, again, across many other capabilities as well. KKR has had a very active year so far, delivering strong investment performance, raising over $100 billion of capital and meaningfully accelerating both deployment and realization activity. With lots of momentum into 2026, we look forward to speaking with Scott about his expectations for KKR for next year and obviously the investing landscape broadly. Thank you so much for being here. It's always great to see you.
Thanks for having me back to continue our December tradition, Alex.
Yeah, more to come. So first, Scott, I was hoping we'll kick things off with your views on the economy. KKR has a really broad set of capabilities really around the world. And as part of that, you obviously get a lot of insight into corporate health across many industries, across many geographies. What are you seeing on the ground today, and how do you expect the corporate outlook to shape up for 2026?
Sure. Well, first off, and thank you, everybody, for coming. We all grew up in a world where rising tide lifts all boats. And then there's the proverbial, when the tide goes out, you know who has the bathing suit on. And that was kind of the world for the last few decades. This is not that. There are very different outcomes for different parts of the economy that we're seeing in the numbers. And if you've ever seen like a lock, like when two bodies of water come together and they adjust the water level, it feels a little bit like that. There are parts of the economy and types of businesses that are up here, and there are some behind the gate, and the water is coming down. And the media, the market likes very simple descriptions of what's happening. This defies easy description.
From our seat, it's much more nuanced. So for the economy, take the U.S. economy. We have seen rolling recessions over the course of the last few years. We've been in a manufacturing recession, as an example, for the last two to three years. Building products, tough. Chemicals, parts of leisure, tough. But entire swaths of the economy that are doing quite well that are at the higher water level. If you're exposed to businesses that are being impacted more by tariffs, you're feeling it. So it really does depend on where you are. The largest 100 U.S. companies in the United States have seen their margins expand materially in the last five years, 14%-19%. The next 1,400 companies have had their margins flat and are working to stay even. So it's not easy to describe in one fell swoop. Same thing's true for investment managers.
What you're seeing right now and feeling right now is entirely dependent on where your exposures are. Are you exposed to the parts of the economy that are doing well or those that are suffering? That's going to be the determinant of your next several years of results, and so Europe, on the whole, slower growth, but there's opportunities on the ground. Asia, quite a bit of growth. Japan reminds us of Europe and the U.S. 30-40 years ago, so it's not a one-size-fits-all type dynamic, and the key thing to understand in our business, 2010 through 2020 was the rising tide lifts all boats, right? Last five years, interest rates up, inflation up, wars, tariffs. You cannot jump the gate on the lock. You are where you are in the private markets business based on the decisions you've made the last five-to-ten years. In answer to your question about 2026, I think it's going to be more apparent the decisions people made over the last 5+ years. This haves and have-nots dynamic will become more visible.
Yeah. So maybe more bifurcation in returns and probably wider divergent trends across the marketplace.
Exactly right.
Yeah. All right, let's step away from the macro for a second and talk about you guys specifically into next year. At KKR's Investor Day, you set targets to raise over $300 billion of capital 2024 through 2026. You're well on your way there. I think you raised over $200 billion so far, give or take, so kind of 70%-ish of your targets. So clearly on your way there. As you move through the process, what are some of the key fundraising themes you're hearing from LPs? And then maybe spend a minute also on where are you surpassing your expectations and what are some of the areas that are proving out to be a little bit more challenged within that $300 billion number?
Yeah, sure. We're having a record fundraising year, and it's really been incredibly broad-based. So you're right. You mentioned it's about $101 billion over the first nine months of the year. And we're seeing significant demand across all of our asset classes. And I think what's starting to be clear back to the bifurcation point is investors are seeing that we hopefully are on the right side of a bunch of those decisions that needed to be made thoughtfully over the course of the last 5 years-10 years. And that's showing through in the results. And that's why, despite all the headlines and everything you read, we're having a record year. And that's including for our private equity funds, which continue to be larger than the last vehicle. So if you look at it, let's go by asset class first.
Sure.
A lot of demand in credit, asset-based finance. $55 billion of the $101 billion, by the way, so far this year has been raised in credit. So we're seeing a significant amount of demand there. Infrastructure, investors are still trying to catch up to their allocation. So there's a lot of interest in that asset class, no doubt. Private equity, despite the haves and have-nots dynamic, if you've got the results and you're sending cash back, which we are, there's still quite a bit of demand around the world. The asset class that's been further behind is real estate .
But I would bifurcate it. Real estate credit, there's actually interest in. And our real estate business is about half credit. Real estate equity, I would say, is still the toughest asset class to raise capital in today. But I think there's a general acknowledgment that the market bottomed in 2023, and things are starting to get better. So some of the family offices, and I would say the more forward-thinking institutions are starting to come back to real estate equity as well and talking to us more about that asset class. By investor type, sovereign wealth funds, risk-on. We are seeing insurance companies allocate more to alternatives. Pension funds, certainly infrastructure, private credit, definitely working to catch up to their allocation.
Private equity being more judicious. They're consolidating their relationships. So they're firing GPs and concentrating more of their capital with partners that are performing. And then depending on where you go after that, family offices continue to be investing. Private wealth, really just getting started. I'm sure we'll talk about that. And then retail at the very, very beginning. So back to the broader point, we are seeing a significant amount of demand for what we do and feel like we have a lot of wind at our back. And as the performance bifurcates and that becomes more apparent, we feel especially optimistic about the next few years.
Great. Let's talk about the flip side of this, which is realizations. Probably most topical of that is really within private equity. As you mentioned, that's been also a bit of the world, kind of the haves and the have-nots. KKR has been actually seeing a really nice ramp in realization activity over the last several quarters. I think Rob highlighted about $1 billion of monetization income opportunity over the next couple of quarters. So maybe one, give us a bit of a mark-to-market on what you expect that to shake out.
The market's been, I guess, a little bit more uneven, feels a little better today than it did a couple of weeks ago, but we are where we are. So how do you expect that to unfold? As you look at your forward monetization pipeline, maybe give us a little bit of a breakdown between equity exits, sponsor versus corporates, continuation vehicles, kind of how are you thinking about this monetization cycle to unfold?
I appreciate the question. So we have a bit of an odd existence right now, everybody. So we keep reading all these headlines about how it's really hard to raise money, and we're having a record fundraising year. And then we keep reading all these headlines about how it's really hard to sell anything and monetize. I realized carry is up 50% year- over- year over the first nine months. And so when we kind of step back, what we're reading about is not consistent with our actual results and our actual experience. And it's not just that the realized carry is up 50% in the first nine months. We're actually seeing, despite that, our unrealized carry, so kind of the amount we haven't yet realized, is also up year to date, 14%.
That means that the underlying portfolio continues to perform despite all the monetizations that we've had. If you step back and you look at the whole firm, we've got about $17 billion of unrealized carry and gains. That's within $200 million of our all-time high. That number is up 10% over the last year and up 50% compared to two years ago. My ask of you as it pertains to KKR is do not believe the hype. Look at the facts. Those are our facts. The reason for that is we think we've been thoughtful in being ready for the market that we're in now and what we think is coming. We don't have many companies that are exposed to a lot of what we talked about before. The parts of the economy that are feeling more of the pressure, we have less of that.
We're much more services-focused. We're much more global. So we've had a lot of our monetizations this year, for example, in Asia, where, as you know, we have a very large franchise, and so people tend to get too U.S.-centric and paint everybody with one brush. In terms of the types of exits, to your question, it's been about 1/3 , 1/3 , 1/3 . IPOs, strategic sales, and sponsor sales. I think that's a reasonable expectation for the forward.
Great. Well, speaking of headlines, I think we should probably talk for a couple of minutes about private credit. So credit broadly accounts for, I think, about a third of KKR's management fees, and it's growing mid to high teens, so quite healthy over the last few years. The business is also very balanced between liquid, direct lending. Obviously, you mentioned asset-based finance. GA has been a big important part of the conversation as well. As you look out over the next one to two years, how do you think about sustainability of that mid to high teens fee growth for credit, and what are the kind of key building blocks within that?
I think we're going to continue to see really robust growth in credit. Part of it, we know it because we've already raised the money. Remember, a bunch of the money that we raise in credit, the fees don't turn on until the capital is invested. So when we talk about the capital we're raising in asset-based finance, as an example, other parts of private credit, we know the capital is already raised. It's just as we deploy, you'll see the management fees turn on. It'll turn into fee-paying AUM. But a lot of the areas of strength, ABF has become a real asset class. I think people talk private credit, and they think it's just direct lending.
So we manage about $280 billion in credit, give or take. Roughly $130 billion of that is in private credit. If you work through it, $40-$45 billion of that $130 is actually in direct lending. There's $80-$85 billion+ that's in asset-based finance. That's a much bigger market. So just to dimensionalize direct lending by the $1.7 trillion market, ABF, we think, is a $6 trillion market going to $9. So you've got to continue to see capital raised there, both in an investment-grade format and an opportunistic format. Asia credit is relatively small today, but I think has a lot of growth and opportunity ahead. That market is just starting to develop. We have an opportunistic investing business that kind of sits between equity and debt. It's more structured debt that we think that opportunity is really attractive, especially in this kind of a market.
So I think you're going to see significant growth across all of those. And then insurance companies in Global Atlantic are feeding a lot of this because they like the yield. And so as we're sourcing these investment opportunities, we're putting some in the Global Atlantic balance sheet, the third-party capital, and there's a syndication opportunity for capital markets as well.
Yeah. Let's double-click on that for a second. Asset-based finance broadly for you guys, but the industry broadly has become a much more important driver of growth. GA has been an important sort of anchor and foundation around the platform for you guys. But you did mention that third-party capital is starting to become a bit more interested in the asset class. So spend a couple of minutes on how do you see third-party opportunities within KKR's ABF business evolving. And when you think about the risks, I think when it comes to direct lending, it's actually relatively easy to analyze. There's a lot of data out there. It's levered corporate credit. It's a little bit more opaque when it comes to Asset-based finance, particularly related to consumer credit. So how do you think about the risks in that part of the market, and what are your sort of exposures to consumer maybe within ABF specifically?
Sure. So just to give you a sense for our ABF business, it's about $84 billion of AUM today. That number is up 30% over the last 12 months and 80% over the last two years. So it's seen significant growth. And I think when you read all these headlines about private credit, there is, to your point, a real focus on corporate private credit, which is more the direct lending. So think senior secured lending to middle market companies. And there's no doubt we've been through a period of time where the losses in that space have been relatively low. We're expecting a return to a more normal default environment.
And frankly, if you lended a bunch of money to a bunch of the vintage 2021 private equity deals, or you lent against revenues in the tech space, especially for deals done during that period of time, you probably are going to have some issues. But what we're seeing broadly defined is a return to a more normal default environment. And I think that people are overreacting to that return. That's not to say that some people won't have bigger issues than that. But to be able to actually get a 9%-10% running return down to low single digits, you have to have a lot of defaults and really poor recoveries. And that is a very small part of the business for us. ABF is the bulk of private credit, to your point. $15 billion of the $84 billion, that is really the more opportunistic end.
The most recent fund we raised was about $6.5 billion. The predecessor fund was $2 billion. So significant growth there. In the investment-grade space, the other $60-some-odd billion of that asset class for us, we're seeing a lot of demand. Think separate accounts. We raised five scale separate accounts just in the third quarter for those who were new clients to the firm. So we're going to continue to see that investment-grade, high-grade ABF space continue to grow. And then we're also introducing actually a new private wealth product in the ABF space. And so we'll continue to see this in fund format, separate account format, and then private wealth and beyond.
Great. We'll get to private wealth in a second, but I did want to hit on real assets as another important growth vertical for you guys. You obviously have a very large infrastructure business, one of the largest in the world. This business as a whole has been growing management fees at over 20% per year, really for the last three years. Maybe walk us through how you think about sustainability of that growth, especially once the Global Infra Fund completes its fundraising cycle, which you guys are still in the market with. And I guess in that context, any signs of real estate recovery? I know you mentioned there are some green shoots, but maybe you can expand on that a little bit as well.
Yeah. And there's one thing I missed on your prior question, Alex, which is in ABF on the consumer front, I think you were getting at. We only focus on, for that, probably half of the business would have a consumer exposure. We're focused on prime and super prime. We're not going beneath that. And so the very small part of the book would be below that. Look, in real assets, infrastructure, it's been a really fast-growing business for us. $95 billion of AUM today. That number was $15 billion five years ago, all organic growth. Investors like the story, right? It's got some current return. It's inflation-protected. It's themes you can touch and feel, like digitalization, data centers, power, fiber to the home. It's very straightforward, and people really like real assets. So we're seeing demand from a bunch of different places. And our business is very broad-based.
So just to try to give you a couple of examples, so we have our Global Infrastructure Fund called the Flagship that we've raised so far for that most recent vehicle, $15 billion. The prior was $16.6 billion. This fund will be larger than its predecessor. We have an Asia infrastructure business. We've already raised $3 billion for that. That's Asia infra three. The prior vehicle is $6.6 billion. I expect this vehicle will be larger than the predecessor as well. We don't talk about it much, but we actually have a core infrastructure business that's been around five years. That business has just quietly, steadily gotten up to now $13 billion of AUM. And then in our case here, it's our private wealth space. We have K-INFRA, which is gathering assets at a rapid pace and ahead of our expectations.
So I think you're going to continue to see a lot of growth in infrastructure. Real estate, back to my point, that's $85 billion. So you got 95 INFRA, 85 real estate. The 85 real estate, about half credit, half equity a nd it's got the growth profiles I mentioned before. But I'm more optimistic. I think the bottom's behind us in real estate. And I think as we go over the next couple of years, you're going to see kind of a cyclical recovery and interest in that asset class again.
Well, and probably also a bit of that bifurcation, right, between the 100%. Yeah, and real estate's probably even more bifurcation.
And we're really fortunate because we started our business post-GFC, very little office exposure very little retail exposure.
Right.
And so we're feeling quite good about that have have-not anyway.
Yeah. Okay. Let's talk about the wealth channel. A bunch of questions on this because it's obviously a very important topic for you guys and really the space broadly. Starting maybe with a question around K-Series, really nice growth, $32 billion in assets currently, and really consistent flows, which we like to see across private equity and INFRA. Maybe walk us through your expansion plans for these vehicles across distribution networks, and what are some of the other products you're thinking about coming to market with in this K-Series part of the story?
Sure. So you're right, $32 billion so far. It's really early. So $32 out of $720-some-odd billion, obviously a relatively small percentage, but we're kind of in the top of the first inning around private wealth. The vehicles that we have, we have vehicles today across all four of our major products: so private equity, real estate, infrastructure, and credit. But we're seeing really rapid growth. It's ahead of what we thought it would be. So the $32 was $15 billion a year ago and $6 billion two years ago. And so we're ramping at a very rapid pace. And the next step for the strategy is really simple. We're going to keep investing in headcount and keep growing the team from a distribution standpoint because this is a ground game. You've got to be kind of in the offices of the advisors.
We started with the wirehouses, now focused on RIAs, thinking about IBDs, and where do you go from there. More investment in Europe and Asia. About 40% of our flows right now are actually outside the United States. We're leveraging our global footprint, and we're going to be even more active internationally. We're going to be getting on more platforms as a result and scaling advisor education. We run these KKR Academies all over the world to educate advisors on what we're doing and what's happening in K-Series. You're going to see more products. I mentioned we're calling it K-ABF. It will be the next thing that will be launched in that suite. I'm sure we'll talk about it, but we also have our partnership with Capital Group, which goes below the accredited investor. Obviously, K-Series is focused on the accredited investor and up.
Yeah. Let's talk a little bit about that. So you guys were one of the first, maybe the first, alt manager to announce a partnership like that. Obviously, really powerful brand between you guys and Capital. A slightly different audience for that, a slightly different sales process. The flows have been fairly muted so far. So maybe talk a little bit about reception you're hearing in this channel for this product in the channel and when you actually expect some of these initiatives to ramp a little faster.
Yeah. Look, just to give everybody the background, so what we did with Capital is we created more or less a hybrid product. It's a combination of their liquid public product and our private markets product in one wrapper, and it's designed to be able to go to the 90% of households that are below the accredited investor level. Because despite the progress we talked about on K-Series, we're hitting sub-10% of, as an example, U.S. households. This partnership with Capital is meant to go to the other 90%, and so it is very early days, so we've launched now two credit vehicles. We're on file with the SEC with a private equity vehicle, and then we've got in the lab a hybrid vehicle focused on real assets, the public-private construct, basically the same idea across all of those, and so that's what we're doing there.
I would not react to the flows yet. We've got $500-$600 million so far. We didn't expect any more than that at this stage because we're not on the platforms yet. A lot of this you're going to see launch as we get into the first half of next year. And then I think we should be having a conversation. I don't know what to expect. This is a new asset class. We're spending a lot of time on education. When we shared the $300 billion capital raise number back at our investor day, this was not part of it. Okay? So think of this, whatever happens here is upside relative to the numbers we've talked to you about. But we're really optimistic. I do think it's going to take some time.
But we also, in the last week or two, announced an expansion of our partnership with Capital Group. So it's not just these public-private vehicles that we're creating that we're doing together. We're also working on target date funds and model portfolios and working even more closely. They've been a fantastic partner to us. And so we're really leveraging their amazing distribution footprint and their amazing investment capabilities. We could never build what they have. So our perspective was, why not partner and then marry the best of both of us?
Yeah. So much more of a multifaceted relationship on that.
Exactly.
As the wealth channel grows, it obviously creates a very different and new market structure for the alt ecosystem broadly than anything we've really seen. And as part of that, obviously, alpha is not infinite. To an extent where some of the institutional investors are used to getting some of the fee-free co-invest, and that's always been part of the relationship, that might change or that creates perhaps some tension as now you have vehicles competing for these investments at 125 basis points. How do you manage that tension, perhaps, and what do you think is the outcome of this kind of evolution going to be on the space?
Yeah. No, I've been reading about the same questions. And we do get questions from institutional investors just like yours. How should we think about this? Now, our facts are maybe a bit different. I can't speak for other firms. We have always been short capital at KKR. We have never had enough capital to actually pursue the ideas we have and the investments we're able to source. So much so just to give you a sense, we typically will syndicate $15 billion-$20 billion per year of excess deal flow. And one of the things that we are very religiously focused on, and part of the reason that our portfolio has been performing well, we did not see the over deployment that the sector saw, for example, in 2021 and the first half of 2022, is we focus on linear deployment.
I know it sounds super low-tech, but if you got about five years to make an investment out of a fund, invest about 20% per year, and where people in our industry get in trouble is they over-deploy relative to the linear line or they under-deploy, so what happens is people under-deploy in 2020, and they over-deploy in 2021, and then they live with regret. We're very focused on staying close to the line. What that means is even if you have an investment you really like, you're only going to deploy so much of that into your committed funds, so we generate significantly more excess opportunity than others because of us adhering to that philosophy and approach, and so even away from that, we have a lot of excess flow. With that philosophy, we have a lot more than we've ever had.
So people are always surprised to hear this, but 30%-40% of our co-invest actually goes to people that do not invest with KKR. So our institutional LPs, they get filled. They have a significant amount of demand. They get what they want. We still have a lot left of them. So a simple way to think about the answer to your question for K-Series is the first answer is the people that are going to get squeezed are the people that don't invest with KKR already. It's not going to be the institutions. And that's what's happening right now. So we are taking it away from them. And all that means, to your point, is yes, you won't make the capital markets fee in the same way, but we're going to actually generate a fee and a carry that are ongoing and not one time.
If we do our job, hopefully that money sticks with us for a very long time. So I would think of it as for the same amount of work, the same amount of expense and headcount in the firm, we're able to monetize more of that deal flow. And the proof is in the pudding, right? So if you look at our most recent Americas Private Equity Fund raise, that is kind of the answer to your question, right? The last fund was sizable. This fund will be larger. We've already closed on $17 billion. I think we'll be at $20 billion+ . Who knows? We'll see what happens. Things can change. But our expectation is that we'll continue to see that franchise grow while K-Series grows.
Yeah. It's an easy trade-off to make between that decision on syndication versus subsidy. Okay. Let's pivot a bit. So one of the maybe unique elements of KKR's story is your Strategic Holdings. It's something you guys announced, I guess, a couple of years ago, a bit of a pivot in the strategy. But your guidance is calling for material acceleration in dividends from that part of the business. You were doing about $120 million over the last 12 months on the way to $350 million in 2026.
Can you update us on some of the key operating metrics at the portfolio company level? Anything you want to share, revenues, EBITDA growth, etc. And really importantly, that bridge that there is a pretty sizable ramp that you expect to see next year. When you zoom out a little bit broadly, a little bit more strategic question, how do you manage this portfolio and what do you expect the kind of the composition to look like over the next several years?
Sure. And just for those of you with maybe less background, so we're a little different, right? So we have an asset, our asset management business, which is what you read about a good amount. We have an insurance segment. And then we also created what we call Strategic Holdings, which is where Alex's question is coming from. And the basic observation that was behind that business is there's a bunch of companies that we really liked that didn't model out to a 20%+ return, but we thought generated attractive long-term cash flows. We're highly recession resistant. Might have modeled out to a mid-teens, mid-teens plus return, but much lower risk that you might want to own for 10 years- 20 years. We now have 18, 19 of those companies. We also, by the way, created a third-party business alongside, $35 billion-$40 billion of AUM in this.
Think of it as the Strategic Holdings segment is our share, our direct ownership in those companies. Our direct share of those companies today, about $4.2 billion of revenue, about $1 billion of EBITDA, give or take. You also have a whole bunch of third-party AUM where we got fee and carry that gets booked in the asset management business. That's the high-level background. What we said is now we started this strategy eight years ago. These companies are maturing. They're delivering, and they're starting to pay us dividends. That $350 of guidance for dividends for next year going to $728 and $1.1 billion+ in 2030, that's where that's coming from. The answer to your question is we live with these companies every day. We're still seeing high single-digit revenue and EBITDA growth uniformly.
We've now owned these businesses, as you think about it, through COVID, through rising interest rates, through tariffs, and they've continued to plug along at high teens, high single digits to low teens, revenue and EBITDA growth throughout. Very steady, Eddie. I would think of them if you like fee-related earnings and you like the durability of fee-related earnings and the ability to model it; these businesses have the same characteristics, and they're starting to pay us a lot of cash. And as Joe and I and our team think about how we're going to continue to scale our market cap from $100 billion or whatever to $200 billion to $300 billion to $500 billion, it's going to be the combination of all three elements working together, and the beautiful thing about this is we didn't hire a single person. This was just monetizing deal flow that was already in the firm that we were doing nothing with. That's what's going on with Strategic Holdings.
Yeah. In the last couple of minutes here, I would love to get your perspective on some of the inorganic opportunities as well. KKR largely has been an organic growth story. You've stayed out of the market in terms of some of the larger deals, obviously, that we've seen out there. There was a headline, I think, last week that you guys were looking at something perhaps in the sports media space. But how do you think about the opportunities for KKR to accelerate some of the growth in M&A? What are the things you're looking for?
We've actually, I mean, if you step back, I know maybe it hasn't been as flashy, but Global Atlantic. We did KJRM, so we're the third largest REIT manager in Japan. FSK, we bought a BDC platform. Earlier this year, we bought a healthcare royalties platform. So we've probably spent $10 billion, $11+ billion on acquisitions, probably issued $2 billion-$3 billion of equity and debt to do it, given the way that we run the firm. Those businesses have created an extraordinary amount of bottom line, $2+ billion of pre-tax easily for that $10-$11 billion. We've quietly just been plugging away with our M&A strategy, and it's worked quite nicely for us thus far. If you step back and think about the attributes, right? We only want to be in businesses where we think we can be top three in the world.
If we don't think we have a path to that, it's not a good use of our time and energy. We want to make sure there's an element of permanency of capital. It's hard to do asset management acquisitions. If you got runoff capital, you're going to end up paying for the business two or three times. That seems like a bad idea, right? So we like permanency of capital, and we like relatively few people because we're focused on our culture, right? So if we can find that, it's hard to find, to your point, then we've had great success. But critically, there has to be a cultural fit. And that's the lens through which we look at these things.
Great. Okay. All right. We'll leave it there. Scott, thanks so much. Great to see you.
Great to see you.
Look forward to next year.
Yeah. Thanks, guys.