Seeking Alpha

KKR's Kravis warns on buyout leverage levels

  • “We’ve done a lousy job of telling our story," says KKR co-founder, co-CEO, and co-Chairman Henry Kravis, speaking at a P-E conference. "People think private equity is hedge funds. We have not done a good job as an industry.”
  • Of the current somewhat-frothy environment, the LBO giant says banks are enabling higher leverage multiples, now as much as 7x on U.S. buyouts. "“This is not a game of financial engineering." Overburdening companies with debt forces them to become disproportionately focused on repayments. "That ain't gonna work."
  • At the game for a long time - he and George Roberts founded KKR in 1976 - Kravis reminds private equity remains "unequivocally" central to the firm despite expansion into other areas leading some to describe KKR as an alternative asset manager. Retirement plans? “I love what I’m doing, George loves what he’s doing ... [we'll stay at the helm] as long as we’re…healthy and having fun and our partners don’t kick us out.”
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