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.

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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.

Henry Kravis – Business Profile

henry-r-kravis

Img: Via kkr.com

Henry Kravis co-founded Kohlberg Kravis Roberts & Co. (KKR), along with is cousin George R Roberts and mentor Jerome Kohlberg in 1976. He is currently the Co-Chairman and CEO of the firm with Roberts. Henry Kravis started off his professional career working at Bear Stearns alongside his cousin in the late 1960s. After Bear Stearns rejected several of their ideas, Kravis, Roberts, and Kohlberg decided to strike out on their own. Flash forward to 2011 and KKR has over $62 billion in assets and were responsible for major buyouts such as RJR Nabisco, Safeway, and more.

Henry Kravis has used all of his power and money to help others as well. He, alongside wife Marie-Josee Kravis, partnered with Claremont McKenna College to create the Henry Kravis Leadership Institute. The organization sponsors the programs and training of future leaders, and the winner recieves $250,000 towards non-profit operational costs. He also frequently gives talks at Claremont McKenna and other schools about leadership, business, and more.

Kravis was also a founder and co-chairman of the New York City Investment Fund, a “private fund with a civic mission.” Created under his vision, the fund seeks to mobilize the city’s financial and business leaders to build a stronger and more diversified local economy.

Henry Kravis currently resides in New York City with his wife, Marie-Josee Kravis. He has a B.A. from Claremont McKenna College, and an M.B.A. from Columbia Business School.

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