1. Private Equity Is Very Much Alive
The headlines are full of news about a slowdown in private equity activity and stiff competition for deals, but Alisa Amoroso Wood, a Partner and leader on KKR’s evergreen Private Equity strategies, has a different perspective.
KKR’s Private Equity teams have continued to deploy capital actively even during the year’s volatile periods, completing about 30 new investments in the past year, including several public-to-private deals in each major geographic region the team covers, including the United States; Europe, the Middle East, and Africa (EMEA), and Asia. The firm is focusing on themes such as digital transformation and health and wellness, as well as corporate carve-outs. Carve-outs allow subsidiary businesses that are not core functions of a larger parent corporation to operate as standalone entities. In an ideal situation, a sponsor can devote the kind of attention and resources the business may not have gotten as part of a larger firm, teeing the new company up for a new phase of growth and maturation.
“Markets are going to go up; markets are going to come down…you can’t time it,” Wood said. “We go from the bottom up to find good businesses that we can make great…We like the complexity. We like volatility.”
Wood also pushed back on recent skepticism about private equity exit activity, a topic she has addressed before. Though IPO markets have been sluggish in recent years, there are other ways to exit a company. About two-thirds of KKR’s Private Equity exits come through strategic or corporate sales, for example.
2. Private Credit: Momentum Builds as Rates Fall
For KKR Global Head of Private Credit Dan Pietrzak, the story in credit is one of resurgence. Direct lending activity is tied strongly to dealmaking activity, which has accelerated in the last several months following a slowdown in 2022 and 2023.
“We’re busier than we’ve been in the last two or three years,” Pietrzak said of the last two quarters. “I think we looked at more deals in Q2 than in the prior eight quarters, even though Liberation Day happened at the beginning of that month.”
Declining interest rates are another big credit story. Yields will decline in direct lending, which is dominated by floating-rate loans. On the other hand, the cost of capital will also come down which should spur more M&A and deal activity.
Speaking of creditworthiness, Pietrzak said that the market’s attention has been brought back to recognizing the value of strong underwriting standards and diligent credit selection after some high-profile bankruptcies. While Pietrzak sees the issues as idiosyncratic, he also noted that “taking a bit of the steam out” of a competitive lending market might put more focus disciplined lending, which would be a welcome development.
Diversification remains central to KKR’s approach, both across deals and within private credit strategies. Direct lending offers exposure to corporate lending, but asset-based finance offers exposure to a wide variety of tangible, collateralized assets in the real economy, from aircraft to motorcycles to student loans.
3. Infrastructure: Power and Data Converge
James Cunningham, Partner and Co-Head KKR’s evergreen Infrastructure strategies, highlighted that two global forces — energy demand and digital transformation — are converging to reshape infrastructure investing.
After nearly two decades of flat electricity demand, KKR expects U.S. power needs to grow as much as 4%–5% annually over the next 20 years, driven primarily by electrification and the build-out of data centers. Meanwhile, the world’s largest technology companies are expected to spend roughly $325 billion in 2025 on digital infrastructure such as AI and data centers.
“The uncomfortable reality is that power is becoming a big bottleneck,” Cunningham said. “And it’s not just a bottleneck in digital infrastructure—it’s pervasive throughout other parts of the economy.”
This bottleneck creates significant opportunity for investors to back both the energy infrastructure necessary to meet rising demand and the digital infrastructure platforms that rely on that energy infrastructure – from power-intensive data centers to fiber networks and wireless towers.
“There’s a lot of opportunity for us to be investing behind those two themes,” Cunningham said.
4. Real Estate: A Reset Opens the Door
According to Julia Butler, CEO of KKR’s evergreen Real Estate strategy, real estate markets are finally stabilizing after one of the steepest valuation resets since World War II. Capital markets are thawing and sentiment is improving.
“We’re able to buy right now below replacement cost,” she said. “This only happens in very select moments in cycles, when you’ve had such a big dislocation…We’re excited about it because we’re able to buy really well in a moment like this.”
Butler pointed to renewed transaction activity, attractive fundamentals, and a rebound in financing as signs of recovery. KKR is concentrating on sectors such as logistics, housing, and mission-critical properties, where tenant demand is steady even through market swings.
5. The Bigger Picture: Private Markets Can Offer Resilience in Portfolios
Despite divergent dynamics across asset classes, KKR’s managers struck a common chord: Volatility is not something to fear. Across private equity, credit, real estate, and infrastructure, they emphasized the value of a long-term perspective, diversification, and risk management.
In Private Credit, Pietrzak noted that volatility tends to benefit private lenders if syndicated markets slow or freeze. He also noted that credit’s position in the capital structure offers investors some protection in turbulent markets and that thorough underwriting considers worst-case scenarios such as recessions.
Cunningham noted that one of the reasons Infrastructure has become so popular with investors lately is its steady historic performance through cycles and lower volatility compared to equity. The team’s HELP framework (Hard assets in Essential industries, with Long-term cash flow visibility and Privileged market positions) is the backbone of KKR’s risk-based approach to private infrastructure investing.
Real Estate also offers an inflation hedge, but through potential property appreciation and rent growth, which includes both contractual increases and increases that occur as leases reset to new market norms. Butler pointed out that diversification across property types, regions, sectors, and investing in both debt and equity can give investors options in both troubled times and market recoveries.
Wood also pointed out that private markets are increasingly a form of diversification in and of themselves. Private Equity opportunities are expanding as companies delay going public and investors look beyond public equities for growth. “If you’re only investing in the public markets, you’re missing a huge part of the opportunity set,” Wood said.
In a world still marked by uncertainty, KKR’s investment leaders agree on one thing: staying patient, pragmatic, and diversified may be the best way to turn complexity into opportunity.