(Reuters) – Henry Kravis, founding partner of Kohlberg Kravis Roberts, said on Friday seized-up capital markets create opportunities for his private equity buyout giant.
“You can do deals in a deleveraging environment. 2006/2007 were great. We put money out in 2008 too but differently,” Kravis told a panel at the World Economic Forum’s annual meeting.
“There are ways to put money to work. Just in the U.S. alone in the next three years, you have $1.7 trillion of debt coming due. If you carry that out to five years you have $3 trillion. if the equity market and debt markets don’t open in a big way, the need for capital like ours is important.
“Can we raise debt finance? Yes. It’s smaller but possible. But different sources of funding will come to us,” he said, citing sovereign wealth funds, sovereign pension funds and other major investors such as Templeton and Fidelity.
“Leverage has come down tremendously. Rather than have deals of nine, 10 and sometimes 11 times debt to EBITA, now you can get a much lower price with significantly less leverage in it,” Kravis said.
He also expects significant changes in the regulatory backdrop in response to the credit crisis — a view widely expressed at Davos. [ID:nLT477735]
“Financial institution regulation is coming, it’s coming in a very major way,” Kravis said.
(Reporting by Mike Dolan; Editing by Erica Billingham)