Private Equity Tycoon Reveals How He Turned His Company into a $90 Billion Business

Bundles of cash.

Image credit: Shutterstock

Everybody loves a good story about the American Dream, and this one’s pretty big. In a recent interview with Institutional Investor, American financier Henry Kravis gave the inside scoop on how he built one of the biggest private equity firms in the world.

It all started in 1976, when Henry Kravis and his cousin, George Roberts, decided to start their own investment company. Both men were 32 years old at the time. With limited financial resources, they each invested $10,000 into the company. Their partner, Jerome Kohlberg, was about 20 years older and was able to put $100,000 into the company.

Their strategy was to build a company with a unique workplace culture. Both Kravis and Roberts had worked for global investment bank Bear Stearns in the past, which Kravis described as being an “eat what you kill” environment. Kravis and his partners decided very early on that they didn’t want that type of culture, so they set out to design a company that was centered on active involvement and collaboration.

“We set a firm up that everyone would participate in everything we did, and that way we got everybody to work together. And today, 40 years later, that’s the same kind of culture that we have,” Kravis stated.

Being the optimists that they are, Kravis and his partners set an extremely high goal for themselves: raise $25 million. But they soon figured out that they couldn’t raise $25 million on terms that were acceptable to them. So they decided to regroup and set the bar a little lower: raise $500,000 to cover overhead costs.

“And so we said, ‘okay. Let’s go out to have a group of individuals that will put up $50,000 each for a commitment for five years, and if they put that kind of money up, we’ll show them every deal we do. They can come in or not come into the deal, but if they come in, we want 20% of the profits.’”

And that’s how KKR was born. Kravis says that to this day, neither he, Roberts, or Kohlberg have needed to put another penny into the company. With just $120,000, the three of them built the second largest private equity firm in the world, managing a total of more than $90 billion in assets.

KKR Continues Energy Infrastructure Expansion

Hong Kong

One of KKR’s Asia offices is located in Hong Kong. IMG: via Shutterstock

KKR, the private equity and global investment company founded by Henry Kravis, George Roberts, and Jerome Kohlberg in 1976, is no stranger to the energy and infrastructure sectors. For the past thirty years, the company has invested in global energy opportunities—and it’s not slowing down anytime soon.

Recently, KKR announced that it would be continuing the investment trend by expanding its global energy and infrastructure business in Asia by appointing Tony Schultz and Ash Upadhyaya to lead the charge.

“KKR aims to create a unique offering in the energy, infrastructure and natural resources market, and part of that comes from combining our local geographic knowledge with industry expertise,” said Joe Bae, who heads KKR Asia, and Mark Lipschultz, who is Global Head of Energy & Infrastructure. “We are very pleased to have Tony and Ash leading this effort in Asia.”

Schultz and Upadhyaya will focus their efforts on energy, resources, and infrastructure in Australia and Asia. Their goals will include continue building up the team in Asia Pacific, finding new global metals and mining opportunities, and providing flexibility in capital and solutions, according to Justin Reizes of KKR Australia.

Tony Schultz was formerly Managing Director at Sydney’s EIG. While there, he focused specifically on energy, metals, and mining investments in Asia Pacific—making him very well suited to his new post at KKR. Ash Upadhyaya has been with KKR since 2011, previously working as a Director on KKR’s Energy & Infrastructure team in the U.S. Both men bring a huge amount of knowledge about the sector to their new positions.

George R Roberts

george-r-roberts

Img: via kkr.com

George R Roberts is most known for co-founding KKR alongside his cousin Henry Kravis and Jerome Kohlberg. While he may shy away from the media, he is still a very active part of the company on the regional Private Equity Investment and Portfolio Management Committees. Since the founding in 1976, the company has become a staple in the private equity industry.

A couple of years ago, George R Roberts sat down the the Stanford Business school and talked about his success. “It seemed like a good idea at the time.” he said. He also urged the students to not let opportunities pass them by. Roberts is very passionate for education and helping students learn the business world. In late 2012 he made a $50 million dollar donation to Claremont McKenna College (his alma mater) and has given several other talks over the years.

George R Roberts is also the founder and Chairman of the board of directors of REDF (Roberts Enterprise Development Fund), a nonprofit organization based in San Francisco, California. This program helps to create jobs and employment opportunities for “people facing the greatest barriers to work.”

He has a B.A. from Claremont McKenna College and a J.D. from the University of California Law School. Roberts is currently listed as #104 on the Forbes 400 list.

Joining Forces: Blackstone Group, AT&T and More Plan to Increase the Hiring of Veterans

Veterans

IMG: Flickr via Josh LeClair

Serving your country is a very brave and noble thing to do, but unfortunately many soldiers come home and are unable to find a job. This is a problem with vets of all ages and genders. Many companies are following Michelle Obama’s “Joining Forces Initiative”, which helps being attention to the unique needs of America’s military families and encourages the hiring of veterans in the private sector.

“Military members who served after the terrorist attacks on Sept. 11, 2001, have an unemployment rate of 9.2 percent, compared with 7.6 percent among the rest of the U.S.,” said Tina Tchen, chief of staff to Michelle Obama. “Among veterans ages 18 to 24, the rate is 33 percent.” 

KKR & Co., the private equity firm co-founded by Henry Kravis, started “Vets @ Work” in 2011. This program was created to hire more veterans in its portfolio of companies, which currently has over 900,000 people. More big companies have followed suit since then. Stephen Schwarzman, chief executive officer of Blackstone Group LP (BX), said they are going to hire 50,000 U.S. military veterans in its portfolio companies by 2018. At&T announced that they plan to hire 5,000 veterans in the next 5 years as well.

“Jobs aren’t specific to veterans, but veterans have experience that qualifies them for many of our jobs,” said Josh Gelinas, a spokesperon for AT&T in the Carolinas

“We’re in the business of taking bold risk in almost everything we do,” said Schwarzman. “The only downside is that people might not work out, and that’s a risk you have when you hire anyone.”

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