All right. Good morning, everyone. Let's get started. This is Craig Siegenthaler from Bank of America, and it's my pleasure to introduce Scott Nuttall. Scott is the Co-CEO of KKR. Prior to CEO, Scott was Co-President and Co-CEO, and also a member of the board, since 2017. Scott, thank you for joining us.
Thanks for having me, Craig.
KKR is one of the oldest and largest and most prestigious alternative asset managers in the world. The company's evolved significantly from the Barbarians at the Gate days in the 1980s. The business model is differentiated, marrying third-party capital with its capital markets business, and also its big bank balance sheet. Scott, let's start with the first one, the balance sheet. How is KKR's model differentiated, and how do you leverage the big balance sheet and capital markets business to compete?
Great. You're right, our model is a bit different. The way that we've looked at it is we're able to source some very interesting investments all around the world. What we wanna be able to do is to monetize those investments to the greatest extent possible. There's only so many great investments out there. We've decided that our business model would be a bit different for a couple reasons. One, if you wanna figure out how to monetize these, you have to have ways to do that. You're right, we have an asset management business, and we have a capital markets business. We have a balance sheet, and we have an insurance business. The capital markets business is a bit different. What that business allows us to do is access capital for our own deals.
Let's just say you've got an equity check that's $3 billion, you can probably put one and a half billion of that into one of your underlying third-party asset management funds. What do you do with the other billion and a half? You know, we've created a business that allows us to go syndicate that excess amount and create economics for ourselves, as opposed to clubbing up and giving those economics to someone else. Basically monetizing what's already in-house to a greater extent. We also do the same thing on the debt side and across asset classes. Capital markets allows us to act bigger than we are.
What happens is when you go back and you raise successor funds, your investors say, "Oh, you need more capital because you are sourcing these very large transactions and able to speak for them." That's allowed us to scale the asset management business a lot faster. The same theory applies to the balance sheet. We went back and did the work many, many years ago and said, "Well, what if we had just kept all the profits of KKR in KKR back to 1976?" Large dollar, long-term compounding is like the eighth wonder of the world. It was a very interesting piece of math. We converted our model along the way so that we could deploy our own capital into our transactions as well and allow that to compound.
Just monetizing what we were already doing in a bigger and differentiated kind of way. You also don't need as many people when you're making more money from what your existing people are already doing. It allows us to operate with incredibly high margins. The other thing the balance sheet's allowed us to do is act very aggressively in strategic moves. In July of 2020, we spoke for $5 billion to acquire Global Atlantic, which is our life insurance and annuity company. As you'll recall, it was kind of the teeth of COVID. There weren't a lot of competitors for buying a business at that time. If we didn't have the balance sheet and the liquidity the balance sheet had afforded us, we could not have spoken for that deal. We ended up retaining 60% ourselves, so we have control.
It's a nice compounding asset. It's created now the better part of $140 billion of AUM that we manage. Not only do you have a nice compounding business that you're invested in, it's also created a significant amount of fee-related earnings and carry potential.
One of the businesses that you're most excited about today is the core private equity business.
Yeah.
You know, what makes you guys so positive in this business, and also how does this fit into your balance sheet strategy?
Absolutely. Core, for those of you not familiar with it, think of recurring revenue businesses that have, you know, significant market share, and real brands in their space. Because of their business profile, they're probably not gonna be private equity-like return potential. They're probably gonna be more mid-teens than 20%+. As we looked at the world, there were a lot of these investment opportunities that we looked at and said, "This is great. They're lower risk, so they probably don't need as high a return." There weren't really pools of capital out there formed around that opportunity set, which is massive. We created this core business, core private equity, several years ago.
Similar to what I mentioned in terms of how we thought about Global Atlantic, what we did is we made a investment off our balance sheet, which is now our largest exposure. About 32% of the balance sheet is in core, give or take. We also have third-party capital alongside. We have a significant investment that's compounding at really attractive returns. It's actually been compounding at 20%+, just the balance sheet investment itself. Then when you add on the fee and carry opportunity from the third-party capital, you very quickly get to a 20%-30% ROE with no leverage. That's the general dynamic. It's kind of how we've, you know, looked across the balance sheet as a whole, is what's that all-in ROE look like? We now have 19 investments in that portfolio.
We do generate economics from it, if you think about it, management fees, carried interest, capital markets activity around the portfolio and new deals. One of the things we talked about on the call last week, and we're sharing with more frequency, is that underlying portfolio of investments continues to compound and do quite well, especially in an environment like this, where it's really nice to have a recurring revenue portfolio. What we shared is somewhere between $600 million-$650 million of EBITDA is actually just our look-through share from our balance sheet investment in those companies. Because we report on a TDE basis, a realized cash basis, we're not selling these investments today. The idea is to let them compound for the long term.
We're pointing out that even though this is 32% of the balance sheet exposure, it's about 1% of our TDE. Over time, we're just gonna keep sharing this with the market as to what this looks like. We'll think about whether it makes sense to ever adjust our reporting to incorporate that more in our bottom line, but at this point, we just wanna make sure you know what we know. We're the largest shareholders, so we feel really good about having this underlying set of companies that we're continuing to participate in the growth of, and we think we can continue to scale this platform, which is now $30+ billion for us.
Let's pivot into fundraising. You just had your second strongest fundraising year ever in 2022, and this is despite not really having any kind of flagship fundraises in there or any that were significant. When do you expect to begin your next fundraising cycle, super cycle, and any early thoughts on kinda sizing of it?
Sure. You're right. Last year, we raised $81 billion. It was our second-best year ever. What was really interesting to your point is we did not have much flagship activity at all. You know, over 50% of the money we raised last year was actually in products that didn't exist five years ago. There's been a lot of innovation, but these on average fit, you know, smaller strategies than the flagships. Somewhere between 70% and 80% of the money we raised was actually for real assets and credit. A significant amount of interest in products that have yield and some inflation protection associated with them. In terms of the flagships, you know, we don't give timing guidance per se.
I will share, you know, for example, our Asia private equity fund's over 50% committed and deployed already. Our infrastructure four fund is higher than that. I would expect before too long we'll be back in the market, but certainly in the 2024, 2025 timeframe. In terms of size, you know, we've had really nice performance, which is why we share this inception to date performance slide with you with some frequency. As long as the performance stays strong, our expectation will be the next vintages will be larger.
You're currently in the market raising a little more than, I think, 30 strategies in 2023. These aren't your biggest strategies, but there's a lot of them. What are your thoughts on the fundraising kinda trajectory this year? There's also some headwinds, like the denominator effect. Like, you know, what type of offset does that serve?
Yeah. I'd say, in terms of the headwind part of the question, there's no doubt, in 2021, investors globally were looking to be a bit more risk on. In the kind of middle part of last year, there's a little bit of a pause, but that pause was more predominant in U.S. pension plans, which tend to be a little bit more fully allocated to alternatives and are a little bit more beholden to asset allocation parameters they have agreed with their board. What happens is the public markets trade down, the denominator goes down, their allocation to alternatives, because alts tend to be written down not as quickly as the public markets, there tends to be pressure. They tend to hit up on some of those asset allocations.
That tends to be more of a U.S. pension fund dynamic. If you think about where we raise money, it's all around the world. It's pension funds, sovereign wealth funds, insurance companies, high net worth in family offices, private wealth. There's more and more people that we find investing in the asset class. When we look at the overall picture, it actually still looks pretty good, and we're having a lot of very interesting conversations around the world. I will also say with the markets rebounding a bit in January, we're finding that with the turn of the calendar and that dynamic, even some of the conversations we're having with U.S. pensions are starting to pivot a little bit. Like, all right, I probably was too slow as an investor to invest post-financial crisis and invest post-COVID.
People don't wanna miss out on it again. There's a little bit of a discussion that we're having even with those audiences around, how do I get risk on in this type of environment? I'd say the overall fundraising picture's still quite good. We, as I mentioned on the call, we've made a big investment in our sales force. We've gone from 100 people to over 280 in the last two years. That's also meaning we're out introducing ourselves to a number of people we've never met before across all of those categories.
Let's continue with the fundraising theme, let's concentrate on the individual investor effort. You've been expanding your sales force. You have more products out there. KREST has gotten fairly large. Can you update us on your private wealth strategy?
Sure. Well, private wealth is still... We view as almost all upside for us. We manage a bit over $500 billion of third-party capital. To put a number on it, $67 billion of it comes from individuals on a direct basis. If you look within that 67 at the kind of true democratized vehicles, it's $6 billion. It's roughly 1% of what we do. We have a lot of road ahead of us. We've been focused on creating product, investing in the sales team, building relationships with private wealth platforms all around the world. KREST is still pretty small in the grand scheme of KKR. It's $1.6 billion. Relative to $500 billion, quite small. That is our real estate, private real estate vehicle.
We actually were in positive flows in Q4. Like others in this space, you know, we had some redemption requests. We've satisfied the 5% contractual requirement. I think that ultimately ended up being some 60 some percent of the ask. It's still relatively small in the grand scheme of things. KREST a year ago was something like $700 million. It's still grown quite a bit net. We think there's a lot of road ahead for all of these products. You should expect we'll have vehicles across all four of our major asset classes in the market this year, including private equity, infrastructure, credit, and real estate.
Let's just start with the limits for a minute.
Sure.
Blackstone BREIT was December 1. You guys were about, I think, a month or two after that one, January. What does that mean to you? Is the product functioning, as intended? Alternatively, when do you expect it to open back up?
We're still raising capital, and still, you know, seeing inflows into the vehicle. You know, this is gonna be an ongoing dynamic, and I think the product is working as expected. I think every, you know, kind of roughly eight-12 years, there's gonna be a period of time where there's some market dislocation, and people may ask for some of their money back. We've been really clear with the platforms and our investors, you know, we'll satisfy a 5% cap in terms of quarterly redemptions. It's set up so that that is, you know, the limitation for lots of different reasons. So far, the vehicle's functioning as expected, and I think we're just getting started.
The other thing is, you know, if you look at the return, even last year, we were up 8%+ with a 5%+ yield. The underlying investor experience has been a good one.
Good. Outside of real estate with KREST, what other products are there and what are the product gaps too? You know, I think you can do a lot more in infrastructure, for example.
Sure. Yeah. I think for those of us that don't know us as well, we've kinda meaningfully expanded our product set in the last decade. We've gone from roughly six investment products to 35+ in the last 10-12 years. A lot of that has been creating new businesses. It's also been creating adjacencies. Think, you know, tech growth and healthcare growth sitting alongside private equity, and frankly, going global. We started in Asia in private equity, but now we've brought real estate credit, infrastructure, tech growth to Asia. As you do that, you have this more of a proliferation of products. I'd say most of the major legs of the stool are now established. What we need to do is keep scaling. We have a strategy.
We don't wanna be all things to all people. We just wanna focus on areas where we can be truly special. We've defined that as we need to be able to be on a path to top three in the world in everything that we're doing. If we don't have a viable way to get there, we should not be doing it. On that definition, we have a lot of scaling ahead of us, 'cause we think that there's a significant opportunity. As you know, you really start to inflect in these businesses once you get to kind of fund three, fund four. It takes 10 years to develop a 10-year track record. It just does. What happens in our business, you tend to have fund one is relatively small.
Fund two, you earn your way to a bit more scale and size. By the time you get to fund three and four, you can really inflect. You know, our Infra three fund was $3 billion, Infra four, $17 billion. You know, it goes from $3 billion, $1 billion, $3 billion, $7 billion, $17 billion tends to be the dynamic. That was our infrastructure path on global infra as an example. You know, we're seeing that inflection dynamic across a lot of different parts of the firm, and we're starting to hit that fund three, fund four milestone across a lot of different things we're doing. That's part of the reason you've seen us double our AUM in the last two years. Global Atlantic was a big part of that, but the other big part of the story was this inflection part of the curve.
As we look at the product set to your question, there are a couple areas where we still see meaningful opportunity. I'd point to climate, alongside our infrastructure strategy would definitely be one of those. Another one that I'd point to is life sciences is another big opportunity set for our space and for us in particular that I'd point to. Those will be meaningful for us, but I think relative to the scaling dynamic, not nearly as powerful, but meaningful in their own rights.
Let's change it up and move on to insurance.
Sure.
As you said, I think it was 2020, COVID, you jump-started that business. You acquired Global Atlantic from Goldman Sachs. Your business model in insurance is differentiated to the other large-cap alts. How has this acquisition fared, and how do you view this business as different to some of your large peers that have a similar business?
Sure. It's fared really well. I think the punchline is when we announced the transaction, Global Atlantic had $72 billion of assets, we're approaching $140. The basic thesis was very straightforward. GA had built a wonderful business, you're right, initially as part of Goldman Sachs, then spun out with Goldman and their private wealth system as an investor. But they were getting to a scale where they realized they needed to have more of an investment engine to be able to double again. They were thinking about how could they build their own alternative asset management team inside their firm, very hard to do. We happened to meet each other at just the right time.
We along the way had been looking for a partner that had a very straightforward liability structure where we could manage a significant portion of the assets, and we didn't need to worry. We've owned insurance companies for decades. We didn't need to worry about the bump in the night exposure on the liability side. GA just happened to have a very straightforward liability structure and something very easy to understand. It's basically largely issuing annuities to individuals. Think people in their fifties and sixties managing their own retirement wealth. It's kind of an indirect distribution to private wealth is a simple way to look at it. We found each other, came together with that thesis. Great management team led by Allan Levine, who is the founder of the business inside Goldman, and we could bring the origination, and they could bring the liability generation.
It's worked beautifully well for us. We're way ahead of schedule, and we see even more growth opportunities ahead. We did do this a bit differently. Back to the balance sheet story. As you know, our balance sheet's roughly $25 billion today. Some part of the growth opportunity we have is if we could just double that every five years. That's very meaningful opportunity for us. We've been doing at least that over the last several years. We looked at GA as a great balance sheet investment, as a good compounder. They had generated a mid-teens ROE for a very long time throughout their history. We said, all right, let's make an investment in that great 15% plus returning business. We tell the market 12%-13%, they've outperformed. That's how you get to the 15.
That's the actual performance, more or less. Then on top of that, we manage the $139 billion on GA's balance sheet. That creates a significant amount of economics for KKR. You put the two together, you get a very attractive overall return. That part of it is a bit different. We're a majority owner. We like being the majority owner of the business. We think there's more stability to the underlying fee arrangements and relationship. The Global Atlantic team actually sits with us in Hudson Yards, and so the teams are quite integrated.
Let's stick with GA, let's move on to credit quality. We keep waiting for this recession to happen, although, you know, jobs numbers are great, let's see what actually happens. You know, at some point, there could be a pickup in defaults on the commercial consumer side. How do you feel about the credit quality inside GA? In an event of a, you know, some pickup in defaults in the industry, you know, could there be some level of realized loss content coming out of GA?
There could be, but if you look at the portfolio itself, it's 95% investment grade. Before KKR got involved, it was 95% investment grade. Post-KKR involvement, it's still 95% investment grade. If you think about the work we do with Global Atlantic, it is not going to be in our equity products to a very large extent. It is gonna be across corporate credit, real estate credit, asset-based finance, and you use a lot of structure. When I look at the portfolio, it's been performing quite nicely, frankly, better to your question, than we might have expected, given the anxieties about the environment. So far, we haven't seen real deterioration. There's always things to watch, and I'm sure there will be some pickups. We've gotta watch the commercial real estate book, as an example.
That's something that we're reserved for and looking at closely. As I look at the overall portfolio, it's been performing very nicely. The other thing I'll say that was interesting is if you think about when we were doing diligence on Global Atlantic, it was during 2020, you know, as we were going through the market dislocation related to COVID. We got to do our diligence at a period of time when everything was getting difficult very rapidly. That was when we were digging and diligencing the business and the investment portfolio and the management team. We got to see that stress test live in front of us while we're doing diligence.
The portfolio performed very well in that period of time, and more or less, the overall makeup of the portfolio, despite the fact it's larger, has the same credit quality today. That gives us a lot of confidence.
Scott, you have a great Asia business, you know, root Pan-Asia business. You know, my questions are, how were you able to build that? Because it's much larger than peers. Longer term, you know, how do you think of the growth trajectory of the alternative asset management business in Asia versus here in the United States?
No, look, you're right. We do have a very large Asia business. You know, if you look at KKR, we have 23 offices, just to give you context. 17 are outside the United States. Nine of the 17 are in Asia. We do have a very global business. My co-CEO, Joe Bae, moved to Asia in 2005 as our first and only employee in Asia and really built out the platform initially in private equity. We felt the need to be incredibly local. We wanted teams on the ground 'cause you gotta be in these markets. That's hence the nine offices across the region. We started building just like we do every other business, Asia One, Asia Two, Asia Three. The business has performed very nicely.
On the back of that private equity performance, we've now scaled these other businesses that I mentioned in terms of the rest of the firm going to Asia. It is a massive market. It's more than 50% of global GDP growth. There's 800 million millennials in Asia. To your question about where do we see growth in the world, we think it's gonna be over-indexed to that region. We've said we believe someday our Asia business will be bigger than our US business, that's still our belief. It's gonna take time. Asia is roughly $60 billion of the $500 billion we manage today, we think there's a massive opportunity ahead.
As long as we execute well, we think we're incredibly well, well-positioned in that part of the world, both in terms of investing and then also raising capital. It feels like there's a lot of runway, and we're continuing to invest in our Asia build-out.
What does the competitive landscape look like in Asia? Like, we know what it looks like in the U.S., but in Asia, you have a lot of different countries, different regulators, different cultures. Are you battling more kind of local domestic managers in each region than it's kind of the bigger U.S. guys?
Tend to be. On the whole, there's less competition in Asia for what we do. Absolutely, that's absolutely the case. It's a real benefit of being local. For example, during COVID, when you could not fly anywhere, having local teams allowed us to actually get deals done, work with our portfolio companies, real competitive advantage of being on the ground. You know, we do see the opportunity is large, and there tends to be less competition. To your question, you're right. It tends to be more local competitors that don't have the scale and don't tend to have the global toolkit that we have and the ability to connect dots. You know, you gotta have a lot of patience. I mean, we went to Tokyo, started our Japan business in 2007.
It took six, seven years to do our first deal. It just takes time to develop that presence, those relationships. Now Japan is 40% of the capital we have deployed in Asia. There's a significant opportunity as conglomerates in that part of the world get simpler and sell non-core subs. We can help those businesses go global by working cross-border. There's not a lot of our competitors that can do that.
In 2022, we had a bear market. It impacted parts of your income statement, investment income, capital market transaction fees, although performance fees actually held up pretty well. You know, it looks like there might be multiple coiled springs in the income statement kind of from this level. Just honing in on transaction fees, do you think we've reached a trough level? How do you think about the recovery in these fees into the next bull market, potentially making kinda new highs?
Sure. No, it's a good question. I think you're right. I think there's a little bit of this question, well, how do you think about the business in an environment like this one? On the call, we talked about the fact, you know, if you own in, you know, a bunch of investments that have been performing well, which we do, they're gonna be markets where you wanna sell more and where you wanna sell less. All else equal, recently, that's been in a market where you probably wanna sell a little bit less. You wanna hold on to an asset a little bit longer and wait for the markets to get a bit better. The monetization environment is probably a bit more of a cautious one for us as we wait. Doesn't mean the valuations are under pressure, that things would be worth less.
We just think they might be worth a little bit more a little bit later. The other place we've seen that, to your point, is in the capital markets business, as overall capital markets activity has been more muted. Those transaction fees you're referencing tend to show up in that business. That business for us last year generated $600 million of revenues. The way to think about it, really strong Q1 last year on the back of kind of the carryover from 2021. You know, the following three quarters averaged about $110 million in fees a quarter, give or take. My expectation is this quarter's probably been a bit more muted.
A little bit of the carryover from last part of last year into Q1. We'll probably have more of a lower capital markets revenue quarter this quarter. We are starting to see activity pick up again in the capital markets. It does feel like the debt markets are starting to open up a little bit in different parts of the world. It feels like transaction activity is starting to pick up, and our pipelines are really strong. To your question, Craig, which I think is a really astute one, that bodes really well for the go forward.
While investment income and cap market fees were down a lot in 2022, your performance fees held up much better than I would have thought. What drove that dynamic, and then what's the outlook into this year? 'Cause realizations are still pretty light, heading into the first half.
Oh, you're right. We do, we do have a large global portfolio. I think there's a tendency sometimes for all of us, and I do this too, is 'cause we sit in the U.S., there's a tendency to think of the U.S. as kind of the predominant fact set. There's no doubt Europe probably has similar dynamics as the U.S. Asia, if you think about it, low inflation, low rates. It's a very different dynamic in that part of the world. Having a business with as much global balance as we have, and as diversified as ours is really powerful in a, in a market like this one. Overall, I do think, you know, if the market stays like it is, it's probably gonna be a more muted monetization environment.
What happened last year, good stuff happens. You know, we had a garage door company that we owned in the U.S. A strategic buyer wanted to own it. We sold it for a big multiple. You know, we did not predict that happening at the beginning of last year. When you have hundreds of investments around the world that are performing and are constantly in the market, you know, there's gonna be good things that happen. That's why you've got, in effect, this kind of underlying consistency of performance income, even though I can't tell you precisely where it's all gonna come from.
Where are you focused right now on the product innovation front?
Yeah. I think, you know, a lot of it's around private wealth, and in effect, democratizing what we do. Roughly, we think based on numbers we can find, there's about $1.8 trillion of individual investment in alternatives. We think that $1.8 trillion has a path to getting to $11 trillion. That is an extraordinary amount of growth. We also think there's gonna be far fewer firms that can do this well than have been able to do the institutional investor bit well. If you think about what you need, you need to invest in product, sales team, service team, and you need to have a brand. There aren't that many firms around the world that have all of those attributes. We're very focused there in the first instance.
It's a critical priority for us for this year, is in effect bringing everything that KKR does to that audience. We think this is a multi-decade growth opportunity. Just to put that $9 trillion of growth opportunity in context, depending on numbers you look at, you know, the alternative space today is somewhere between $10 trillion and $15 trillion on the kind of narrowly defined non-insurance, non-asset base. You're talking about a significant opportunity that there's gonna be a significant amount of share going to relatively few. We're very focused on that. The other thing we're focused on, per discussion earlier, is just adjacencies to what we're already doing. Climate, life sciences, there's gonna be opportunities along those lines that we think are interesting. Building out Asia will continue to be a big opportunity for us.
Sidecars alongside Global Atlantic and creating more vehicles alongside our insurance platform, those would be some of the areas I'd point to.
If we kind of pull all the comments, that you made today, and we think about total organic growth, how should we think about the growth trajectory of KKR?
Well, I think we see an extraordinary amount of growth ahead. If you put together everything that I just said, the vast majority of our businesses are not yet at scale. You know, we've said recently that we think at least 50% of the firm's activities are not yet scaled. We're getting closer to that inflection part of the curve. We see an opportunity to, you know, make these businesses larger by multiples, not by percentages, by multiples, if you think about things like real estate, infrastructure, Asia. We see a lot of growth there, on the back of just kind of that experience that we've had. We've got the investment in the sales team I mentioned. That will take a year or two, but is maturing now.
As those sales teams are out spending time with investors, we're meeting new people all the time. I think that will be a big opportunity for us. If you think about a bunch of the things we've discussed, private wealth, real assets, including real estate and infrastructure, Asia, insurance, core, doubling the balance sheet again, we think there's a real opportunity to double KKR again from here. Because even though the firm's been around 47 years, the vast majority of our activities have been around five-10. As all of that scales on the back of everything I talked about, I think there's a significant amount of growth ahead for us.
Great. I think we have time for a question or two, if anyone in the audience has one. Samir?
Just piggybacking on that a little bit. That's a good summary. It seems like if you take all these individual components, balance sheet, the growth in institutional going into retail, insurance, you guys can continue compounding at well north of a 20% CAGR just on earnings. You know, you get a little bit more credit on the multiple. You're looking at, you know, the $150 stock, trading at, you know, 16.50 to 60. Would you consider?
That was put in place. I think our average price is somewhere around $26 a share. As we look at it as a body of work, we feel quite good about the buyback policy that we've had and how we've executed it. It's a balance, right? 'Cause we also wanna have dry powder to do things like Global Atlantic. What we didn't talk about is last year, we also bought a REIT manager in Japan, which is the second-largest real estate market in the world, so that's more permanent capital for us. We look at it as you'd expect us to as the largest shareholder. We wanna make sure that we're deploying capital where we're gonna generate the, you know, best long-term return, buyback is definitely a part of that.
Yeah.
The rationale for the balance sheet, you know, you made that acquisition in 2017. In 2017, the rationale was we need the balance sheet to scale some of the strategies where we are not yet present. I mean, five years on, you haven't scaled them yet, but you've made some great inroads in real estate and many others as well. Now that you have the building blocks to basically double the AUMs over the next decade or so, whatever the timeframe is, what's the rationale for keeping a balance sheet rather than, for example, buying back your stock? You have the certainty of executing a buyback versus reallocating and creating risk in reallocating that capital. How do you think about that dilemma now, maybe in light of the previous question as well?
Sure. No, it's a great question, something that we do spend a lot of time on. You're right, the use of the balance sheet has continued to evolve because 2010 through 2015, a lot of it was around seeding new businesses and basically allowed us to scale more quickly 'cause you go see investors and say, "We're putting in $500 million. Do you wanna put in $50?" You know, it was a different kind of discussion than you put in $50, I'll put in one and a half, which is the typical model. You're right, we don't need the balance sheet as much for that type of a discussion. The balance sheet has pivoted.
If you think about how we've largely used the balance sheet the last several years, a lot of it has been around scaling AUM, fee-related earnings, and TDE. We don't talk about it much, but we own 40% of Marshall Wace, which has been a great contributor to us as that business has tripled in size. You know, a lot of fee-related earnings, a lot of carry, no KKR employees. We've got great partners in that business. Global Atlantic, we talked about. You know, we've added $140 billion, very meaningful to the firm, and we're able to use the balance sheet to make that happen. The REIT platform, we bought a BDC platform called FSK, you know, basically the public REIT manager, or BDC manager that we manage all the assets for.
You think about even just those big four, we added a lot of permanent capital, a lot of fee-related earnings, and a lot of AUM and growth opportunity and very few people. It's all very culturally friendly. The balance sheet has been pivoting to do more of that type of activity. I think what happens sometimes is there's a little bit of confusion. The balance sheet, we view as a strategic weapon for us. It allows us to scale more quickly. It's just pivoted from organic to some of the inorganic. We'll still do the buybacks from time to time. We do really like this core platform as well that we've been building 'cause we think there's lots of recurring net income over time and recurring dividends we'll generate from that.
The core is part of the balance sheet strategy.
The core is part of the balance sheet strategy.
You indicate if you need to start talking on which strategy.
Think of it this way. In core, we will have, so the most recent vehicle, roughly, you know, we will have parties alongside us, it'll be two-thirds of the capital, we'll be a third. Give or take. It actually is a third-party AUM business for us.
Vantage is part of the core?
Sorry.
Vantage Towers that you bought as part of the-
Vantage it sits in infrastructure and a little bit in core. Some of these things sit in multiple places. The way to think about that part of it is about today a third of the balance sheet that will continue to grow. The way we look at the job, the market cap's roughly $50 billion today, give or take. We want to figure out how do you get to 100, and then how do you get to 200, and how do you get to 400, right? As we look at our model of being able to actually combine asset management, capital markets, balance sheet, and insurance, we see, we see a path. It's going to take all of those, and then opportunistically we'll buy back stock along the way. Yes.
Thank you. When you speak of the opportunity to double the size of KKR again, broadly speaking, how much of that do you anticipate will be in flagship PE versus the newer products?
Broadly speaking, I'd say the vast majority is gonna be in non-flagship PE, but flagship PE will continue to grow. I think we'll continue to see... If you think about our flagship PE, we raised three regional funds as opposed to many that raised one global fund, which is great because you're in different parts of the market fundraising cycle, and you've got the ability to have more overall capital. We're $40+ billion per fund cycle right now. I think that'll keep growing. Just by the very nature of the newer businesses being younger, right? We have $60 billion in infrastructure today. That'll be several hundred billion, right? We have $50 billion-$60 billion in real estate. Same thing. We think that's several hundred billion of opportunity.
I think as a direct answer to your question, just by virtue of the relative age and stage, it's gonna be the non-flagship PE, but we'll continue to see flagship PE grow, and flagship infrastructure, and flagship real estate, et cetera. I think it's all of the above. On a percentage basis, it's probably some of the younger stuff.
With that, we are out of time.
Great.
Scott, on behalf of all of us at Bank of America, I just wanna say thank you very much.
Thank you. Thanks for having me. Thanks for coming, everybody.