KKR & Co. Weighs Buybacks, Acquisitions as USI Sale Poised to Unlock Over $3 Billion

Key Points

• KKR expects its pending USI sale to generate more than $3 billion in liquidity and more than $2 billion in profit. It will decide how to deploy the proceeds based on opportunities, including strategic investments, insurance, acquisitions and share buybacks.
• KKR has allocated more than $900 million to buybacks year to date, at an average price of about $92 per share. Recent Strategic Holdings acquisitions are expected to largely replace USI’s foregone operating earnings by 2030 while using less capital.
• KKR expects its Strategic Holdings portfolio to grow operating earnings from more than $350 million in 2026 to more than $1.1 billion by 2030; its K-Series private wealth vehicles have about $45 billion in assets, up 55% year over year.

KKR & Co. Inc. NYSE: KKR plans to deploy proceeds from its announced USI sale across a range of opportunities, with no fixed allocation to any one use, Chief Financial Officer Rob Lewin said at the BMO Financials Conference.

Lewin said the transaction is expected to generate more than $3 billion of liquidity and more than $2 billion of profit. He corrected an earlier characterization by conference moderator Brennan Hawken, Bank of Montreal’s head of diversified financials research, who had described $3.3 billion as profit.

KKR decided to sell USI because it believed it could reinvest the proceeds to generate more earnings per share and faster earnings growth, Lewin said. The deal had not yet closed, he added.

USI Proceeds and Strategic Holdings

KKR’s four principal uses for capital are Strategic Holdings, insurance, strategic acquisitions and share buybacks, Lewin said. The allocation will depend on opportunities available at the time rather than predetermined percentages.

The firm had allocated more than $900 million to share repurchases year to date at an average price of roughly $92 per share, Lewin said. He added that the opportunity for buybacks had improved since KKR decided in August to monetize USI, when its shares traded at approximately $110.

KKR has also announced three Strategic Holdings acquisitions in recent weeks: Integer, Gen II Fund Services and A1 Garage Door. Lewin said KKR expects those investments to largely replace USI’s foregone operating earnings contribution by 2030 while requiring less capital than the sale freed up.

USI was sold at a 33% premium to its unaffected valuation mark, Lewin said. He expressed confidence that Strategic Holdings could grow from more than $350 million in operating earnings in 2026 to more than $1.1 billion by 2030. The portfolio contains roughly 20 businesses, he said.

Private Wealth and Margins

KKR’s K-Series private wealth vehicles have approximately $45 billion in assets under management, up 55% year over year, according to Lewin. He said individual investors currently allocate an estimated 1% to 2% of their portfolios to alternatives and projected that figure could reach the mid-single digits over the next decade.

Lewin said KKR moved the incentive allocation for its private equity K-Suite vehicles from realized performance revenue to fee-related performance revenue at the beginning of the year to align its reporting with industry practice.

The change subjects the revenue to a 15% to 20% compensation load, compared with 70% to 80% previously, he said. Based on approximately $550 million in anticipated K-Suite incentive fee-related performance revenue this year, Lewin estimated that roughly $300 million that otherwise could have entered the compensation pool would flow through to shareholders.

Lewin said KKR could sustainably operate at a fee-related earnings margin in the mid-60% range, while noting that it had recently been closer to 70%. Those levels are not a cap, he said, because the firm aims to grow revenue faster than operating complexity and headcount.

Insurance, Credit and AI Infrastructure

KKR reduced the pace of capital allocation to insurance in the first half of the year but increased it in September and October as rates rose and fixed-income spreads widened, Lewin said. He said returns depend on competition for insurance liabilities and on pricing in asset markets.

Global Atlantic, KKR’s insurance business, has $6 billion of third-party dry powder, Lewin said. Once deployed, he estimated that capital could support more than $60 billion of fee-paying assets.

In asset-based finance, Lewin described a market exceeding $5 trillion and said KKR’s platform includes 20 origination platforms with 7,000 employees. He said KKR can shift capital among those platforms as risk and return opportunities change.

Lewin also discussed Helix, KKR’s dedicated artificial intelligence infrastructure business. Helix raised $10 billion in founding equity capital in the middle of the year, and Samsung subsequently committed another $1 billion, he said. Lewin said a higher cost of capital could improve future return opportunities for the vehicle, which combines data center, power, connectivity and financing capabilities.

Arctos Integration

About six months after KKR closed its acquisition of Arctos, integration is ahead of plan, Lewin said. Arctos invests in sports and operates Keystone, a solutions provider to general partners that recently closed approximately $6 billion of capital.

KKR is raising capital for a third sports-strategy vintage and is likely to launch a general partner-led secondary strategy in 2027, Lewin said. He reiterated KKR’s ambition to build a business exceeding $100 billion through the Arctos acquisition, while acknowledging that substantial work remains.

About KKR & Co. Inc. (NYSE:KKR)

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