Stone Point Capital and KKR have formed a partnership to establish a new company, KKR – SPC Merchant Advisors LLC. The newly formed company will provide principal and agency-based capital markets services to mid-market and sponsor-backed companies as well as make certain principal investments to support client needs.
Stone Point Capital (“Stone Point”), through its Trident V private equity fund, and KKR & Co. L.P. (NYSE: KKR) today announced the formation of a partnership to establish a new company, KKR – SPC Merchant Advisors LLC (“Merchant Advisors”). The newly formed company will provide principal and agency-based capital markets services to mid-market and sponsor-backed companies as well as make certain principal investments to support client needs. This new business will be distinct and separate from KKR’s existing capital markets business (“KKR Capital Markets” and, together with its affiliates, “KKR”), which primarily serves KKR’s private equity portfolio companies.
Trident V and KKR will each commit $150 million of equity, or $300 million in total, to Merchant Advisors to support its capital markets activities and client base. Merchant Advisors will be overseen by a board of directors consisting of equal representation from KKR and Stone Point. The day-to-day origination, execution and underwriting activities of the company will initially be managed by KKR Capital Markets executives. Over time, Merchant Advisors may expand its business to include other services that are valued by its clients, including risk management and fundraising services.
“The financial services industry is going through unprecedented change that is creating challenges for companies to conduct business. We see an opportunity for an independent capital markets business that is willing to take on principal risk and allow its clients to pursue their growth and business development initiatives,” said Chuck Davis, Co-founder of Stone Point. “We are partnering with KKR on this opportunity because we have known and worked with Craig Farr and many of the people on his team for several years and have great confidence in their abilities. The firm has clearly demonstrated the value of a dedicated capital markets unit that works for its portfolio companies and it has assembled an experienced team that can support our efforts to provide similar services and expertise to other mid-sized companies,” Mr. Davis said.
“Stone Point is a leading investor in the financial services sector with a strong track record of backing new and innovative platforms, and KKR is excited to partner with the team. Together with Stone Point, we believe Merchant Advisors will be well positioned to deliver a critical capital markets service to underserved corporate and sponsor clients, particularly as the structure of the financial industry is getting reshaped,” Craig Farr, Member of KKR and Global Head of Capital Markets, said.
Henry Kravis and George Roberts, Co-Chairmen and Co-CEOs of KKR added, “We have known and respected Steve Friedman and Chuck Davis from Stone Point for many years and are excited to work with them in this new partnership. Middle market companies and financial sponsors need access to more services and capital and we believe KKR – SPC Merchant Advisors will be well positioned to provide both.”
This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Without limiting the foregoing, statements regarding the partnership with Stone Point and KKR-SPC Merchant Advisors LLC may constitute forward-looking statements. Such statements are subject to the risk that the terms of such transaction may be modified, the transaction may not be completed at all or the benefits and synergies from such transactions are not realized. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. Additional information about factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on February 27, 2012, and other filings with the SEC, which are available at www.sec.gov.
About Stone Point
Stone Point Capital LLC is a global private equity firm based in Greenwich, Connecticut, that has a 25-year record of making successful investments in the financial services industry. Stone Point Capital serves as the manager of the Trident Funds, which have raised more than $9 billion in committed capital to make investments in lending, banking, insurance, asset management and other financial services companies. For further information about Stone Point Capital, see www.stonepoint.com.
Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $61.5 billion in assets under management as of June 30, 2012. With offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with investors through its client relationships and capital markets platform. KKR is publicly traded on the New York Stock Exchange (NYSE: KKR). For additional information, please visit KKR’s website at www.kkr.com.