PE discovering its love of communication?

KKR noted its newfound respect for communication and transparency as a business advantage on its earnings call; revisiting some recent advice on comms and transparency for smaller firms.

KKR had a good quarter. In fact, it had a record one in terms of fundraising, writes Isobel Markham.

Asia was a big contributor to the success of the quarter. CFO Robert Lewin underlined how the firm is seeing perhaps its biggest opportunity in Asia, where its assets under management are up some 60 percent from a year ago.

Qualitatively, some of the success was attributed to KKR’s newfound respect for the power of communication and transparency. COO Scott Nutall says the firm has “learned a lot” during the crisis, having “really picked up” its dialogue with investors and prospects, “comparing notes on what we’re seeing, talking about doing what we’re doing in terms of playing offense, a little bit on what we’re doing to play defense.” The statements have a kind of extroverted quality you get from people after a breakthrough moment.

“So, I think one of the big lessons for us is that communication and transparency has really been beneficial to enhancing those relationships,” Nutall said on the call.

If the advantages of communication and transparency with both current and prospective investors is a genuine lesson learned, then KKR’s endorsement of it likely illuminates some of the future for the industry writ large.

Of course, pretty much everyone in the business has been forced to up their communications and transparency game – we and sister publications across PEI Media have written too much about that to list here as evidence – but the question of whether the trend sticks is an interesting one, as well as the question of what aspects of this embrace of communication and transparency stick in the long run.

On that note: Smaller firms will likely have to up their game in this area to compete – something PEF Services president and CEO Anne Anquillare noted in a recent webinar. “GPs need to be communicating to existing investors as to what exactly is happening, even if you’re not in the fundraising process,” she said. The dictum applies to prospective investors as well: firms should consider giving partial access to investor portals and including prospective investors on communications to existing ones, she suggested.

Email prepared by Graham Bippart