Earnings calls: retail, dry powder and the push into new markets

KKR signals positioning for the retail market, as big firms prep for an influx of new money while exploring new markets.

On its earnings call on Friday, KKR executives noted that they are preparing a push into retail investor offerings, with managing director of investor relations, Craig Larson, saying the firm is “encouraged” by the SEC’s proposed expansion of the definition of accredited investor to be more inclusive.

Blackstone has already made a head start, noting in its earnings call that in 2019, the firms raised a record $26 billion from retail investors, “most of which came from customized products, and we hope to exceed that amount this year,” according to president and chief operating officer Jonathan Gray.

If you missed them, here are the key takeaways from Apollo’s, Blackstone’s and KKR’s earnings calls, courtesy of sister title Private Equity International.

Dry powder: Also of interest from the earnings calls is that executives seem to be spending more time justifying multiples and/or making a big deal out of pointing to markets where they think they’ll be able to continue reaping high returns. KKR says Europe has a generally better risk-reward profile. Blackstone’s Gray pointed to the UK, India, leveraged loans and the secondaries market. He also added that, say 10 years down the line, the universe of investable alternative assets will be significantly larger than now, as perpetually low interest rates push investors to give up liquidity for returns. He noted that alternatives are growing at a pace of 8% to 10% a year.

Email prepared by Graham Bippart