KKR Private Equity Conglomerate LLC

08/13/2025 | Press release | Distributed by Public on 08/13/2025 15:23

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
All dollar amounts in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" are in thousands, unless otherwise noted.
Overview
KKR Private Equity Conglomerate LLC (together with its subsidiaries, the "Company," "we," "us," or "our") was formed on December 6, 2022 as a limited liability company under the laws of the state of Delaware and we operate our business in a manner permitting us to be excluded from the definition of "investment company" under the Investment Company Act of 1940, as amended (the "Investment Company Act"). We are a holding company that seeks to acquire, own and control portfolio companies with the objective of generating attractive risk-adjusted returns and achieving medium-to-long-term capital appreciation through joint ventures ("Joint Ventures"). The Company commenced principal operations on August 1, 2023.
We have been established by Kohlberg Kravis Roberts & Co. L.P. (together with its subsidiaries, "KKR") as the flagship conglomerate to own and control Joint Ventures that, directly or indirectly, own majority and/or primarily controlling stakes in portfolio companies, and to a lesser extent, Joint Ventures that own influential yet non-controlling stakes in portfolio companies. Our Joint Ventures focus on acquiring geographically diversified portfolio companies that operate principally in the following business lines: Business & Financial Services; Consumer & Retail; Healthcare; Impact; Industrials; and Technology, Media & Telecommunications. We intend to own and control portfolio companies in the geographies where KKR is active, including North America, Europe and Asia Pacific. Over time, we expect to acquire portfolio companies that generate attractive risk-adjusted returns, using proceeds raised from the continuous offering of our securities, distributions from portfolio companies, and opportunistically recycling capital generated from dispositions of portfolio companies.
A key part of our strategy is to form Joint Ventures by pooling capital with one or more KKR Vehicles that target acquisitions of portfolio companies that are compatible with our business strategy. We expect that we will own nearly all of our portfolio companies through Joint Ventures alongside one or more KKR Vehicles and that the Joint Ventures will be managed in a way that reflects the commonality of interests between the KKR Vehicles and the Company. The Company and the KKR Vehicles in a Joint Venture both have a shared interest in maximizing value of the Joint Venture, and we believe that a joint acquisition strategy that pools the resources of the KKR Vehicles and the Company leads to greater opportunities to gain sufficient influence or control over portfolio companies and leverages KKR's operations-oriented management approach to value creation with the objective of achieving capital appreciation for all interest holders in the Joint Venture. We currently own, and expect to own in the future, all or substantially all of our Joint Venture interests in portfolio companies directly or indirectly through K-PEC Holdings LLC and any similar wholly-owned holding company formed in the future to acquire, own and control portfolio companies (the "Operating Subsidiaries"). In turn, each Operating Subsidiary holds our interests in portfolio companies and Joint Ventures through one or more corporations, limited liability companies or limited partnerships. We expect that most of our Joint Ventures will own a majority of, and/or have primary control over, the underlying portfolio company. The Company and the applicable KKR Vehicle will hold the interests in each portfolio company as co-general partners of the relevant Joint Venture, but the relative economic interests in such Joint Venture will vary from acquisition to acquisition. In limited circumstances, we may also invest some portion of our capital into portfolio companies indirectly through vehicles we do not control. We may occasionally be a passive investor into a vehicle that holds an investment in a single portfolio company. We may also make investments into vehicles controlled by an external adviser where we do not have direct input into the underlying investments.
We expect that in the ordinary course, our acquisitions of portfolio companies, whether made through our Joint Ventures or, to a lesser extent, our other acquisition strategies, will make up approximately 80% of our assets. We expect that we will own and control the large majority by value of those Joint Ventures and that the large majority by value of such Joint Ventures will majority-own or primarily control their underlying portfolio companies. Additionally, we expect that up to 20% of our assets will consist of cash and cash equivalents, U.S. Treasury securities, U.S. government agency securities,
municipal securities, other sovereign debt, investment grade credit, and other investments including high yield credit, asset-backed securities, mortgage backed securities, collateralized loan obligations, leveraged loans and/or debt of companies or assets (which may include (i) securities or loans of KKR portfolio companies and/or (ii) funds invested in any of the foregoing managed by KKR or affiliates thereof) (collectively, the "Liquidity Portfolio") in each case in order to provide us with income, to facilitate capital deployment and to provide a potential source of liquidity. These types of liquid assets may exceed 20% of our assets at any given time due to new subscriptions, shareholder participation in our share repurchase program, distributions from, or dispositions of, portfolio companies or for other reasons as KKR DAV Manager LLC (our "Manager") determines. In addition to the target of 20% for our Liquidity Portfolio, we intend to abide by certain other guidelines on our overall portfolio construction. We will not acquire any cryptocurrency. Additionally, (a) no more than 5% of our assets will consist of interests in "blind pools" and (b) no more than 10% of our assets will consist of publicly traded equity securities (not including any portfolio company that becomes publicly traded during the term of our ownership or acquisitions in connection with take-private transactions).
We may also opportunistically acquire a limited amount of indirect exposure to multiple portfolio companies by acquiring interests in multi-asset vehicles controlled by an investment manager ("commingled funds"), which may include newly formed funds and certain "continuation vehicles." The Company may invest into vehicles managed by an affiliate of KKR or it may invest into vehicles managed by third parties, primarily through secondary transactions with existing limited partners but also through direct subscription with the sponsor(s) of such vehicles. Our acquisition strategy may also include equity-like investments in preferred and/or structured equity securities as well as opportunistic credit and debt strategies. While none of these approaches are principal to the Company's business strategy, we believe that in certain circumstances, such investments may complement the Joint Venture strategy as a ready source of capital deployment at efficient prices and may otherwise help the Company achieve its objective of generating attractive risk-adjusted returns for shareholders ("Shareholders"). To the extent we pursue any of the foregoing approaches, we expect to do so in a manner consistent with maintaining our exclusion from registration under the Investment Company Act.
The funds, investment vehicles and accounts managed, now or in the future, by KKR, the Manager or any of their respective affiliates (excluding for this purpose, KKR proprietary entities), including funds, investment vehicles and accounts pursuing the following strategies: private equity (including growth equity, impact, and core strategies), credit (including (i) leveraged credit strategies, including leveraged loan, high-yield bond, opportunistic credit and revolving credit strategies, and (ii) alternative credit strategies, including strategic investments and private credit strategies such as direct lending and private opportunistic credit (or junior mezzanine debt) acquisition strategies) and real asset strategies (including real estate, energy and infrastructure strategies), are collectively referred to herein as "KKR Vehicles."
We conduct a continuous private offering of our Shares on a monthly basis (i) to accredited investors (as defined in Regulation D under the Securities Act) and (ii) in the case of Shares sold outside of the United States, to persons that are not "U.S. persons" (as defined in Regulation S under the Securities Act) in reliance on exemptions from the registration requirements of the Securities Act (the "Private Offering"), including under Regulation D and Regulation S. As of June 30, 2025, we offer four classes of investor shares: Class S Shares, Class D Shares, Class U Shares and Class I Shares. As of January 2, 2025, Class R-S Shares, Class R-D Shares, Class R-U Shares and Class R-I Shares (collectively, with the Class S Shares, Class D Shares, Class U Shares and Class I Shares, the "Investor Shares" and, together with the Class E Shares, Class F Shares, Class G Shares and Class H Shares, the "Shares") were no longer available for purchase. We may offer additional classes of Investor Shares in the future.
Recent Developments
Portfolio Company Activity
During the three months ended June 30, 2025, the Company acquired indirect interests in the following new portfolio companies:
Portfolio Company Description
HealthCare Global Enterprises Ltd. HealthCare Global Enterprises Ltd. is a leading healthcare provider in India offering cancer care, tertiary care, infertility treatment, and advanced screening and diagnostic services and is based in Bangalore, India.
SmaXtec Inc. SmaXtec Inc. is a software company that provides a health monitoring system for dairy cows and is based in Graz, Austria.
In addition, during the same period, the Company acquired additional indirect interests in the Digital Classifieds and Digital Content businesses of Axel Springer SE as part of a reorganization of Axel Springer SE, additional indirect interests in ReliaQuest, LLC as part of a reorganization of ReliaQuest, LLC, additional indirect interests in the Citation Group, Blue
Sprig Pediatrics, Inc., Elsan Group SAS, Exact Software Nederland BV and Lighthouse Intelligence Ltd, as part of add-on transactions.
Also, as of June 30, 2025, the Company had funded cash into KKR Evergreen Aggregator L.P. in connection with acquiring an indirect interest in Biotage Sweden AB ("Biotage") on July 2, 2025. Biotage is a global life sciences tools platform that develops instruments, consumables and workflows for chemical separation, purification and sample preparation and is based in Uppsala, Sweden.
The charts below present the diversification of our portfolio companies by strategy, sector and geography as of June 30, 2025, based upon the fair value of the portfolio companies. Percentages reflect a pro forma presentation of the Company's investments as of June 30, 2025, inclusive of any transactions which were consummated after such date but funded by the Company on or before June 30, 2025.
STRATEGY SECTOR
GEOGRAPHY
The chart presents the Company's ten largest investments, based upon estimated fair value, as of June 30, 2025, inclusive of any transactions which were consummated after such date but funded by the Company on or before June 30, 2025
Portfolio Company Sector Country
Cotiviti, Inc. Health Care United States
Omnissa, LLC (f/k/a VMware End User Computing) Information Technology United States
Exact Software Nederland BV
Information Technology Netherlands
Söderberg & Partners Asset
Management SA 		Financials Sweden
Fuji Soft Inc. Information Technology Japan
Biotage Health Care Sweden
BMC Software Information Technology United States
USI Insurance Services LLC Financials United States
CIRCOR International, Inc. Industrials United States
FGS Global Inc Communication Services Germany
During July 2025, the Company acquired indirect interests in the following new portfolio companies:
Portfolio Company Description
Ascend Asia Financial Services Group Pte. Ltd. Ascend Asia Financial Services Group Pte. Ltd. is a newly established financial advisory platform licensed to distribute life insurance, general insurance and wealth products and is based in Singapore.
DAYAO Jiabin Beverages Co. Ltd. DAYAO Jiabin Beverages Co. Ltd. is a local carbonated soft drink brand and is based in Hohhot, China.
EDI Health Group, Inc. ("DentalXChange") DentalXChange is a leading provider of dental clearinghouse and related solutions enabling the automated flow of claims, payment information, and other data between patients, providers, payers, and practice management system (PMS) channel partners and is based in Irvine, California.
In addition, during the same period, the Company acquired additional indirect interests in Biotage and an additional indirect interest in IQGeo Group PLC as part of an add-on transaction.
Business Environment
Beginning in March 2025 and continuing through the date of the filing of this Quarterly Report on Form 10-Q, the United States and countries around the world have experienced elevated levels of market volatility and uncertainty driven principally by geopolitical and global trade concerns, including, in particular, the announcements of the imposition of tariffs by the United States on certain of its trading partners since April 2025 and certain retaliation by such trade partners. This volatility and uncertainty add to the various risks and uncertainties in the business environment in which we operate and may have various impacts, including on the valuations of certain of our portfolio companies, the pace and volume of our deployments and realizations, and our fundraising activities.
Operating Results Highlights
During the three and six months ended June 30, 2025, we raised aggregate subscription proceeds of $891,012 and $2,097,979, respectively, related to Investor Shares. These subscription proceeds were used, in part, to acquire our interests in three portfolio companies as well as add-on transactions in existing portfolio companies totaling $635,354 and $1,316,913 during the three and six months ended June 30, 2025, respectively.
The details of total returns on Investor Shares are shown in the following table:
Transactional Net Asset Value Total Returns(1)
Class D Shares Class I Shares Class S Shares Class U Shares Class R-D Shares Class R-I Shares Class R-U Shares
Share class inception date February 1, 2025 September 1, 2023 April 1, 2025 June 1, 2024 February 1, 2024 August 1, 2023 August 1, 2023
Three months ended June 30, 2025
2.40 % 2.47 % 2.25 % 2.25 % 2.40 % 2.47 % 2.25 %
Six months ended June 30, 2025 Not applicable 8.58 % Not applicable 8.08 % 8.42 % 8.56 % 8.10 %
Inception to date annualized June 30, 2025
Not applicable 12.20 % Not applicable 14.67 % 13.91 % 12.59 % 11.58 %
(1) "Inception to date annualized" for a given share class, means total return annualized based on the inception date. Past performance is not indicative of future results. Total returns shown reflect the percent change in our Transactional Net Asset Value per share from the beginning of the applicable period, plus the amount of any distribution per Share declared in the period, and assumes any distributions are reinvested in accordance with our distribution reinvestment plan. The Company did not declare or pay any distributions from inception through June 30, 2025. For share classes without twelve months of performance, we have not included the inception to date annualized total return.
Results of Operations
We are dependent upon the proceeds from our continuous Private Offering in order to conduct our business. We intend to continue to acquire portfolio companies with the capital received from our continuous Private Offering and any indebtedness that we may incur in connection with such activities.
The following table presents our comparative results of operations (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2025 2024 Change 2025 2024 Change
Investment income
Dividend income $ 21,569 $ 12,837 $ 8,732 $ 35,755 $ 16,688 $ 19,067
Total investment income 21,569 12,837 8,732 35,755 16,688 19,067
Operating expenses
Performance participation allocation 29,468 21,490 7,978 89,485 21,490 67,995
Management fee expense 17,586 5,968 11,618 31,393 8,621 22,772
Professional fees 2,657 2,858 (201) 5,145 5,028 117
General and administration expenses 2,371 1,497 874 4,334 2,914 1,420
Directors' fees and expenses 152 152 - 308 306 2
Interest expense 1,350 - 1,350 2,167 14 2,153
Deferred offering costs amortization - 349 (349) - 698 (698)
Total operating expenses 53,584 32,314 21,270 132,832 39,071 93,761
Less: Management fee and expense credits (18,498) (7,342) (11,156) (32,305) (9,995) (22,310)
Less: Expenses reimbursed by Manager - (959) 959 - (3,170) 3,170
Add: Expenses recouped by Manager 5,112 - 5,112 8,960 - 8,960
Less: Interest expense waived by Line of Credit Lender - - - - (14) 14
Net operating expenses 40,198 24,013 16,185 109,487 25,892 83,595
Net investment loss (18,629) (11,176) (7,453) (73,732) (9,204) (64,528)
Net realized gain (loss) on investments, foreign currency and foreign currency forward contracts
Net realized gain (loss) on:
Investments 32,761 - 32,761 32,761 - 32,761
Foreign currency 2,144 - 2,144 3,041 (54) 3,095
Foreign currency forward contracts (138) 2,874 (3,012) (138) 3,142 (3,280)
Total net realized gain 34,767 2,874 31,893 35,664 3,088 32,576
Net change in unrealized appreciation (depreciation) on investments, foreign currency translation and foreign currency forward contracts
Net change in unrealized appreciation (depreciation) before income taxes on:
Investments 113,595 119,550 (5,955) 447,888 130,529 317,359
Foreign currency translation 112,563 (2,584) 115,147 167,727 (5,026) 172,753
Foreign currency forward contracts (73,902) (601) (73,301) (104,869) 1,128 (105,997)
Foreign currency (17) - (17) 7 - 7
Total net change in unrealized appreciation before income taxes 152,239 116,365 35,874 510,753 126,631 384,122
(Benefit from) provision for income taxes (15) 1,333 (1,348) 22,915 2,634 20,281
Total net change in unrealized appreciation after income taxes 152,254 115,032 37,222 487,838 123,997 363,841
Net increase in net assets resulting from operations $ 168,392 $ 106,730 $ 61,662 $ 449,770 $ 117,881 $ 331,889
A discussion of the results of operations for the three and six months ended June 30, 2025 and 2024, is as follows:
Investment Income
We generate investment income primarily from our long-term ownership and operation of Joint Ventures and portfolio companies and investments in our Liquidity Portfolio, which may consist of dividend income, interest income, and net realized gains or losses and net change in unrealized appreciation or depreciation of portfolio companies.
As the majority of our assets consist of long-term ownership and operation of Joint Ventures and portfolio companies, the majority of the revenue we generate is in the form of dividend income. Dividend income is not equivalent to the gross revenue produced at the portfolio company level, but is instead the amount of cash that is distributed from the portfolio company to the Company from time to time after paying for all portfolio company level expenses and debt obligations. Thus, the presentation of investment income in our consolidated financial statements differs from the traditional presentation shown in the consolidated financial statements of entities not prepared in accordance with Accounting Standards Codification 946, Financial Services-Investment Companies("ASC 946") and, most notably, is not equivalent to revenue as one might expect to see in consolidated financial statements not prepared in accordance with ASC 946.
Dividend income from our portfolio company is recorded on the date when cash is received from the relevant portfolio company, but excludes any portion of distributions that are treated as a return of capital. Each distribution received from a portfolio company is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
For the three and six months ended June 30, 2025 as compared to the comparable periods in 2024, dividend income increased by $8,732 and $19,067, respectively, driven by both an increase in income from money market funds and dividend income received from portfolio companies.
Expenses
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, total operating expenses increased by $21,270 and $93,761, respectively, primarily resulting from an increase in performance participation allocation ("Performance Participation Allocation") and gross management fees ("Management Fee") pursuant to the management agreement entered into between the Company and the Manager, (as amended and restated, the "Management Agreement") earned by the Manager. Management fees were fully offset for the three and six months ended June 30, 2025 and 2024.
For the three and six months ended June 30, 2025, the Manager recouped expenses of $5,112 and $8,960, respectively, incurred by the Company, pursuant to the Expense Limitation Agreement. No such expenses were recouped during the three and six months ended June 30, 2024.
For the three and six months ended June 30, 2024, the Manager agreed to reimburse expenses of $959 and $3,170, respectively, incurred by the Company pursuant to the Expense Limitation Agreement. The amounts are subject to recoupment within a three-year period. No such expenses were agreed to be reimbursed by the Manager pursuant to the Expense Limitation Agreement for the three and six months ended June 30, 2025.
Going forward, we expect our primary expenses to be the payment of the Management Fee, as well as the Performance Participation Allocation to KKR. We will also bear other capital and operating expenses.
Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation) on Investments, Foreign Currency Translation and Foreign Currency Forward Contracts
Net realized gain and loss and net unrealized appreciation and depreciation from our investments and foreign currency translation of assets and liabilities denominated in foreign currencies are reported separately on the Consolidated Statements of Operations. We measure realized gain and loss as the difference between the net proceeds from the sale, repayment, or disposal of an asset and the adjusted cost basis of the asset, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in investments values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when appreciation or depreciation is realized.
For the three and six months ended June 30, 2025, we recorded total net realized gains of $34,767 and $35,664, respectively, due primarily to a realized gain on investments of $32,761 resulting from the sale of an asset during the three months ended June 30, 2025.
For the three and six months ended June 30, 2024, we recorded total net realized gains of $2,874and $3,088,respectively, due primarily to realized gains on foreign currency forward contracts of $2,874 and $3,142, respectively.
For the three and six months ended June 30, 2025 as compared to the same periods in 2024, total net change in unrealized appreciation before income taxes increased by $35,874 and $384,122, respectively. The increase of $35,874 for the three months ended June 30, 2025 compared to the comparable period in 2024 is due primarily to an increase of $115,147 resulting from unrealized appreciation on foreign currency translation related to the change in value based upon changes in foreign currency exchange rates, offset by a decrease of $73,301 resulting from unrealized depreciation on foreign currency forward contracts and a decrease of $5,955 resulting from unrealized depreciation on investments related to the change in value of portfolio companies. The increase of $384,122 for the six months ended June 30, 2025 compared to the comparable period in 2024 is due primarily to an increase of $317,359 resulting from unrealized appreciation on investments related to the change in value of portfolio companies and an increase of $172,753 resulting from unrealized appreciation on foreign currency translation related to the change in value based upon changes in foreign currency exchange rates, offset by a decrease of $105,997 resulting from unrealized depreciation on foreign currency forward contracts.
Provision for Income Taxes
The Company operates, in part, through subsidiaries that may be treated as corporations for U.S. and non-U.S. tax purposes and therefore may be subject to current and deferred U.S. federal, state and/or local income taxes at the subsidiary level, resulting in a provision for income taxes. For the six months ended June 30, 2025 as compared to the comparable period in 2024, provision for income taxes increased by $20,281 as a result of the increase in unrealized appreciation related to the change in value of portfolio companies for investments that are subject to current and deferred U.S. federal, state and/or local income taxes at the subsidiary level. For the six months ended June 30, 2025 and 2024, the effective tax rates were 4.8% and 2.2%, respectively.
Changes in Net Assets from Operations
For the three and six months ended June 30, 2025 as compared to the comparable periods in 2024, net increase in net assets resulting from operations increased by $61,662 and $331,889, respectively, primarily resulting from a net increase in unrealized appreciation after income taxes and net realized gains, partially offset by an increase in Performance Participation Allocation.
Investment Company Accounting Considerations
Since the Company's consolidated financial statements are prepared using the specialized accounting principles of ASC 946, our Manager produces an estimate of the fair market value of each of our portfolio companies monthly. When valuing our portfolio companies, net operating earnings generated at the portfolio company level are included in our valuation models. While the valuation models take into account all revenue, distributions from each of our portfolio companies may be more or less than that included in our valuation models each period due to various cash flow considerations. As an example, since many of our portfolio companies are held in tax partnership structures, or in related entities with bank-financed portfolio company level debt, the Company may be contractually limited in its ability to make dividend distributions from portfolio companies to the Company. Since portfolio companies are not consolidated with the Company under ASC 946, in many cases the net income from operations earned by a portfolio company may not be distributed to the Company in its entirety, and thus may not be reflected in the net increase in net assets resulting from operations. While this non-distributed income is included in the calculation of fair market value and net change in unrealized appreciation or depreciation on investments, it is not included in net investment income or loss on the Consolidated Statements of Operations.
Transactional Net Asset Value
The Company calculates net asset value per Share in accordance with valuation policies and procedures that have been approved by our Board. Our Transactional Net Asset Value is the price at which we sell and repurchase our Shares. Our GAAP net asset value ("GAAP Net Asset Value") is our net asset value determined in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The following table provides a breakdown of the major components of our Transactional Net Asset Value as of June 30, 2025 ($ in thousands, except shares):
Components of Transactional Net Asset Value June 30, 2025
Investments at fair value (cost of $4,871,168)
$ 5,821,295
Cash and cash equivalents 1,448,511
Foreign currencies at fair value (cost of $186)
193
Other assets 15,293
Other liabilities (101,349)
Accrued performance participation allocation (89,432)
Accrued shareholder servicing fees and distribution fees (1)
(5,890)
Management fee payable -
Transactional Net Asset Value $ 7,088,621
Number of outstanding shares 227,901,822
(1) Shareholder servicing fees apply only to Class S Shares, Class U Shares, Class D Shares, Class R-S Shares, Class R-U Shares and Class R-D Shares. Distribution fees apply only to Class S Shares, Class U Shares, Class R-S Shares and Class R-U Shares. For purposes of Transactional Net Asset Value, we recognize shareholder servicing fees and distribution fees as a reduction to Transactional Net Asset Value on a monthly basis as such fees are accrued. For purposes of GAAP Net Asset Value, we accrue the cost of the shareholder servicing fees and distribution fees, as applicable, for the estimated life of the shares as an offering cost at the time we sell Class S Shares, Class U Shares, Class D Shares, Class R-S Shares, Class R-U Shares and Class R-D Shares.
Effective January 1, 2025, the Company updated its Transactional Net Asset Value calculation methodology such that the Company may exclude from the calculation of Transactional Net Asset Value as of the relevant valuation date, tax liabilities of certain taxable subsidiaries through which the Company holds portfolio companies that are contingent upon the expected manner of the divestment of the associated underlying portfolio company and are not expected to be recognized by the Company
(although the current tax liabilities of any such taxable subsidiaries may be taken into account in determining the fair value of the associated underlying portfolio companies).
The following table provides a breakdown of our total Transactional Net Asset Value and our Transactional Net Asset Value per share by class as of June 30, 2025 ($ in thousands, except shares and per share data):
Transactional Net Asset Value Per Share Class D Shares Class I Shares Class S Shares Class U Shares Class R-D Shares Class R-I Shares Class R-U Shares Class F Shares Class G Shares Class H Shares Total
Transactional Net Asset Value $ 116,755 $ 567,530 $ 1,901 $ 904,865 $ 352,195 $ 1,888,036 $ 3,196,089 $ 61,248 $ 1 $ 1 $ 7,088,621
Number of outstanding shares 3,737,299 18,061,719 61,075 29,074,572 11,273,752 60,181,078 103,636,470 1,875,777 40 40 227,901,822
Transactional Net Asset Value per Share as of June 30, 2025
$ 31.24 $ 31.42 $ 31.12 $ 31.12 $ 31.24 $ 31.37 $ 30.84 $ 32.65 $ 32.66 $ 32.66
Reconciliation of Transactional Net Asset Value to GAAP Net Asset Value
The following table reconciles GAAP Net Asset Value per our Consolidated Statement of Assets and Liabilities to our Transactional Net Asset Value:
June 30, 2025
GAAP Net Asset Value $ 6,791,026
Adjustment:
Accrued shareholder servicing fees and distribution fees(1)
251,627
Deferred tax liabilities of certain taxable subsidiaries(2)
45,968
Transactional Net Asset Value $ 7,088,621
(1) Represents an adjustment to reflect shareholder servicing fees and distribution fees related to Class D, Class S, Class U, Class R-D and Class R-U shares sold as they are accrued on a monthly basis.
(2) Represents an adjustment to exclude tax liabilities of certain taxable subsidiaries through which the Company holds portfolio companies that are contingent upon the expected manner of the divestment of the associated underlying portfolio company and are not reasonably expected to be recognized by the Company.
Valuation Methodologies and Significant Inputs
The following table presents additional information about valuation methodologies and significant inputs used for portfolio companies that are valued at fair value as of June 30, 2025:
Valuation Methodology
Unobservable Input(s) (1)
Weighted Average (2)
Range
Inputs to market comparables, discounted cash flow and transaction price/other Illiquidity Discount 8.4% 5.0% - 15.0%
Weight Ascribed to Market Comparables 40.8% 0.0% - 75.0%
Weight Ascribed to Discounted Cash Flow 44.0% 0.0% - 75.0%
Weight Ascribed to Transaction Price/Other 15.2% 0.0% - 100.0%
Market Comparables Enterprise Value / Forward EBITDA Multiple 14.9x 8.2x - 24.0x
Enterprise Value / Forward Revenues Multiple 8.9x 2.3x - 10.8x
Discounted Cash Flow Weighted Average Cost of Capital 11.0% 6.0% - 19.4%
Enterprise Value / LTM EBITDA Exit Multiple 13.8x 8.5x - 23.0x
(1) In determining the inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies, and company-specific developments including exit strategies and realization opportunities. The Manager has determined that market participants would take these inputs into account when valuing the investments. "LTM" means Last Twelve Months.
(2) Inputs are weighted based on fair value of the investments included in the range.
The Manager is ultimately responsible for our NAV calculations.
Valuations involve subjective judgments and may not accurately reflect realizable value. The assumptions above are determined by the Manager and reviewed by our independent valuation advisor. A change in these assumptions or factors
would impact the calculation of the value of our assets. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our asset values as of June 30, 2025:
Input Hypothetical Change Portfolio Company Values
Weighted Average Cost of Capital 0.25% decrease +0.87%
0.25% increase -0.83%
Hedging Activities
The Company may, but is not obligated to, engage in hedging transactions for the purpose of efficient portfolio management. The Manager may review the Company's hedging policy from time to time depending on movements and projected movements of relevant currencies and interest rates and the availability of cost-effective hedging instruments for the Company at the relevant time.
With respect to any potential financings, general increases in interest rates over time may cause the interest expense associated with our borrowings to increase and the value of our fixed income investments to decline. We may seek to stabilize our financing costs as well as any potential decline in our assets by entering into derivatives, swaps or other financial products in an attempt to hedge our interest rate risk.
The Company enters into foreign currency forward contracts to hedge against foreign currency exchange rate risk on its non-U.S. dollar denominated securities or to facilitate settlement of foreign currency denominated portfolio company transactions. A foreign currency forward contract is an agreement between two parties to buy and sell a currency at a set price with delivery and settlement at a future date. The contract is marked-to-market monthly and the change in value is recorded by the Company as an unrealized gain or loss. When a foreign currency forward contract is closed, through either delivery or offset by entering into another foreign currency forward contract, the Company recognizes a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was closed. Foreign currency forward contracts involve elements of market risk in excess of the amounts reflected on the Statements of Assets and Liabilities. The Company's primary risk related to hedging is the risk of an unfavorable change in the foreign exchange rate underlying the foreign currency forward contract. Risks may also arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts.
As of June 30, 2025 and December 31, 2024, the fair value of our foreign currency forward contracts was a net liability of $74,550 and a net asset of $30,319, respectively. As of June 30, 2025 and December 31, 2024, we recorded unrealized appreciation on foreign currency forward contracts of $1,622 and $30,319, respectively, as an asset in the Consolidated Statements of Assets and Liabilities and unrealized depreciation on foreign currency forward contracts of $76,172 and $0, respectively, as a liability in the Consolidated Statements of Assets and Liabilities.
For the three and six months ended June 30, 2025, we recorded a change in net unrealized depreciation on foreign currency forward contracts of $73,902 and $104,869, respectively, in the Consolidated Statements of Operations.
By using derivative instruments, the Company is exposed to the counterparty's credit risk, which is the risk that derivative counterparties may not perform in accordance with the contractual provisions offset by the value of any collateral received. The Company's exposure to credit risk associated with counterparty non-performance is limited to collateral posted and the unrealized gains inherent in such transactions that are recognized in the Statements of Assets and Liabilities. As appropriate, the Company minimizes counterparty credit risk through credit monitoring procedures and managing margin and collateral requirements.
Share Repurchases
We do not, and do not currently intend to, list our Shares for trading on any securities exchange or any other trading market. There is currently no secondary market for our Shares, and we do not expect any secondary market to develop for our Shares. While a Shareholder should view its investment as long term with limited liquidity, we have adopted a share repurchase plan, whereby on a quarterly basis, Shareholders may request that we repurchase all or any portion of their Shares. Due to the illiquid nature of our Joint Ventures and related portfolio company holdings, we may not have sufficient liquid resources to fund repurchase requests. In addition, we have established limitations on the amount of funds we may use for repurchases during any calendar quarter.
There may be quarters in which we do not repurchase Shares, and it is possible that we will not repurchase Shares at all for an extended period. The applicable quarterly share repurchase limit, repurchase price and early repurchase fee are calculated based on the Transactional Net Asset Value.
During the three and six months ended June 30, 2025, we redeemed 20,283 and 30,445 shares of Class R-I Shares, respectively, pursuant to our redemption plan, at an average price per share of $30.62 and $30.04, respectively. During both the three and six months ended June 30, 2024, we redeemed 2,871 shares of Class R-I Shares, at an average price per share of $26.12.
During the three and six months ended June 30, 2025, we redeemed 150,877 and 188,132 shares of Class R-U Shares, respectively, pursuant to our redemption plan, at an average price per share of $30.16 and $29.85, respectively. During both the three and six months ended June 30, 2024, we redeemed 10,837 shares of Class R-U Shares, at an average price per share of $25.97.
During the three and six months ended June 30, 2025, we redeemed 3,398 shares of Class U Shares pursuant to our redemption plan, at an average price per share of $30.44. No Class U Shares were redeemed during the six months ended June 30, 2024.
Liquidity and Capital Resources
As of June 30, 2025, the Company had $1,448,511 and $193 in cash and cash equivalents and foreign currencies at fair value, respectively. Our current cash and cash equivalents and foreign currencies at fair value balances are generally reflective of the cash necessary to fund normal operations, with our cash and cash equivalents consisting primarily of money market funds.
In addition, the Borrowers have entered into the Credit Agreement (as each term is defined in "Note 6. Credit Facility" to our consolidated financial statements found elsewhere in this Quarterly Report on Form 10-Q), under which the Borrowers have available borrowings in an aggregate principal amount of up to $350,000, with an uncommitted accordion feature that would allow the Borrowers to increase the commitment to up to $1,500,000 in the aggregate. The obligations of the Borrowers and guarantors under the Credit Agreement are secured by a pledge of certain accounts of such Borrowers and guarantors. The Credit Agreement matures on December 23, 2027, unless there is an earlier termination or an acceleration following an event of default. As of June 30, 2025, the Borrowers did not have an outstanding balance under the Credit Agreement.
On December 20, 2023, certain wholly-owned subsidiaries of the Company entered into the Line of Credit (as defined in "Note 5. Related Party Transactions" to our consolidated financial statements found elsewhere in this Quarterly Report on Form 10-Q) to provide for up to a maximum aggregate principal amount of $300,000 with KKR Alternative Assets LLC, an affiliate of the Company. As of June 30, 2025, the Line of Credit Borrowers did not have an outstanding balance under the Line of Credit.
We expect to generate cash primarily from the net proceeds from our continuous Private Offering, cash flows from our operations, the Line of Credit, the Credit Agreement, any other financing arrangements we have entered into and may enter into in the future and any future offerings of our equity or debt securities. We believe that cash provided by such means will be sufficient to satisfy our anticipated cash requirements for the next twelve months and foreseeable future.
Our primary use of cash will be for acquisition of portfolio companies, the cost of operations (including the Management Fee and the Performance Participation Allocation, to the extent paid in cash), debt service of any borrowings, periodic repurchases, including under the share repurchase plan (as described herein), and cash distributions (if any) to the holders of our Shares to the extent declared by the Company. The Company may issue Class E Shares to KKR in connection with the Company's acquisition of additional assets in the future.
Cash Flows
Cash used in operating activities
Net cash flow used in operating activities was $1,230,123 for the six months ended June 30, 2025 and is primarily the result of funding the acquisitions of portfolio companies, offset in part by proceeds received from the disposal of an interest in a portfolio company.
Cash provided by financing activities
Net cash flow provided by financing activities was $2,077,290 for the six months ended June 30, 2025, which primarily reflects the proceeds from the sale of Shares pursuant to our Private Offering.
Critical Accounting Policies and Estimates
Below is a discussion of the accounting policies that management believes are critical to understanding our historical and future performance. We consider these policies critical because they involve significant judgments and assumptions and require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. Our accounting policies have been established to conform with GAAP. The preparation of the consolidated financial statements in accordance with GAAP requires management to use judgments in the application of such policies. These judgments will affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.
Valuation of Portfolio Companies
The Company's portfolio companies are valued at fair value in a manner consistent with GAAP, including Accounting Standards Codification 820, Fair Value Measurements and Disclosure ("ASC 820"), issued by the Financial Accounting Standards Board. ASC 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
There is no single standard for determining fair values of holdings that do not have a readily available market price and, in many cases, such fair values may be best expressed as a range of fair values from which a single estimate may be derived in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each acquisition while employing a valuation process that is consistently followed. Determinations of fair value involve subjective judgments and estimates.
When making fair value determinations for portfolio companies that do not have readily available market prices, the Manager considers industry-accepted valuation methodologies, such as: (i) an income approach and (ii) a market approach. The income approach derives fair value based on the present value of cash flows that a business or asset is expected to generate in the future. The market approach relies upon valuations for comparable companies, transactions or assets, and includes making judgments about which companies, transactions or assets are comparable. In addition, when a definitive agreement has been executed to sell an investment, the Manager generally considers a significant determinant of fair value to be the consideration to be received pursuant to the executed definitive agreement.
A blend of approaches may be relied upon in arriving at an estimate of fair value, though there may be instances where it is more appropriate to utilize one approach. The Manager also considers a range of additional factors that it deems relevant, including a potential sale of a portfolio company, macro and local market conditions, industry information and the portfolio company's historical and projected financial data.
Portfolio companies will generally be valued at transaction price initially; however, to the extent the Manager does not believe a portfolio company's transaction price reflects the current market value, the Manager will adjust such valuation. When making fair value determinations for portfolio companies, the Manager will update the prior month-end valuations by incorporating the then current market comparables and discount rate inputs, any material changes to the portfolio companies' financial performance since the valuation date, as well as any cash flow activity related to the portfolio companies during the month. The Manager values portfolio companies using the valuation methodology it deems most appropriate and consistent with widely recognized valuation methodologies and market conditions.
When making fair value determinations for assets that do not have a reliable readily available market price, the Manager will engage one or more independent valuation firms to provide positive assurance regarding the reasonableness of such valuations as of the relevant measurement date. However, the Manager is ultimately responsible for determining the fair value of all applicable investments in good faith in accordance with the Company's valuation policies and procedures.
When making fair value determinations of assets (other than portfolio companies) valued with a net asset value in accordance with ASC 820 (an "Other ASC 820 Asset"), the Manager will generally value such asset based on the latest net asset value reported or provided by the asset's administrator, investment adviser or investment manager, if applicable. If the latest net asset value of such Other ASC 820 Asset is not available at the time the Company is calculating its NAV, the Manager will update the last available net asset value of such Other ASC 820 Asset by recognizing any cash flow activity for the Other ASC 820 Asset during the month.
In addition to tracking the net asset value plus related cash flows of such Other ASC 820 Asset, the Manager, with the support of KKR, may, but is not obligated to, track relevant issuer-specific events or broader market-driven events related to such Other ASC 820 Asset that the Manager believes may have a material impact on the Company's NAV as a whole. Upon the occurrence of such a material event and provided that the Manager is aware that such event has occurred, the Manager may, but is not obligated to, make a corresponding adjustment to reflect the current fair value of such Other ASC 820 Asset, applying the valuation methodologies for portfolio companies outlined above. In general, the Manager expects that any adjustments to fair values will be calculated promptly after a determination that a material change has occurred and the financial effects of such change are quantifiable by the Manager. However, rapidly changing market conditions or material events may not be immediately reflected in the Company's monthly NAV.
Because assets are valued as of a specified valuation date, events occurring subsequent to that date will not be reflected in the Company's valuations. However, if information indicating a condition that existed at the valuation date becomes available subsequent to the valuation date and before financial information is publicly released, it will be evaluated to determine whether it would have a material impact requiring adjustment of the final valuation.
At least annually, the Manager reviews the appropriateness of the Company's valuation policies and procedures and will recommend any proposed changes to the Board. From time to time, the Board, and the Manager may adopt changes to the valuation policies and procedures if they determine that such changes are likely to result in a more accurate reflection of estimated fair value.
Accrued Shareholder Servicing Fees and Distribution Fees
The Company will pay KKR Capital Markets LLC ongoing distribution and servicing fees (a) of 0.85% of NAV per annum for Class S Shares, Class U Shares, Class R-S Shares and Class R-U Shares only (consisting of a 0.60% distribution fee (the "Distribution Fee") and a 0.25% shareholder servicing fee (the "Servicing Fee")), accrued and payable monthly and (b) of 0.25% for Class D Shares and Class R-D Shares only (all of which constitutes payment for shareholder services, with no payment for distribution services) in each case as accrued, and payable monthly. Such Distribution Fee and Servicing Fee are calculated based on the Transactional Net Asset Value. None of the Class I Shares, Class R-I Shares, Class E Shares, Class F Shares, Class G Shares or Class H Shares incur the Distribution Fee or the Servicing Fee.
Under GAAP, the Company accrues the cost of the Servicing Fees and Distribution Fees, as applicable, for the estimated life of the shares as an offering cost at thetime we sell Class S Shares, Class U Shares, Class D Shares, Class R-S Shares, Class R-U Shares and Class R-D Shares. Inherent in the calculation of the estimated amount of Servicing Fees and Distribution Fees to be paid in future periods are certain significant management judgements and estimates, including the estimated life of the shares at the time of a subscription. Accrued shareholder servicing fees and distribution fees entail uncertainties as the calculation requires management to make assumptions and to apply judgment regarding a number of factors, including market conditions, the selling environment and historical trends. As of June 30, 2025 and December 31, 2024, the Company has accrued $257,517 and $176,891, respectively, of Servicing Fees and Distribution Fees payable to KKR Capital Markets LLC, related to the Class R-U Shares, Class R-D Shares, Class D, Class S Shares and Class U Shares sold.
Recent Accounting Pronouncements
See "Note 2. Summary of Significant Accounting Policies" to our consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion concerning recent accounting pronouncements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet financings or liabilities other than contractual commitments and other legal contingencies incurred in the normal course of our business.
Contractual Obligations
See "Note 9. Commitments and Contingencies," to our consolidated financial statements in this Quarterly Report on Form 10-Q for any contractual obligations and commitments with payments due subsequent to June 30, 2025.
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