KKR is a durable mega-alt beneficiary of AI-driven consolidation and underpenetrated Asian/European markets; reinitiated at attractive price.

Um and then KKR which I reinitiated this year which has obviously a portfolio of businesses that it owns and that it has lent to over time and that and and the markets have been nervous about the AI exposure of the software companies and private equity firms and private credit firms portfolios and I reinitiated the position with the view that I think the existing portfolios are what they are right people understand that asset managers will be hurt by some stuff that they bought before AI was a thing.

And I think the firms that are best positioned to survive that are the ones with the longest track records and the most blue chip names that are likely going to be given a pass for a bad vintage or two because they have 10 vintages before that that did very well and they have so much operating history as being good investors that I think they will continue to be durable. while smaller mid-market firms that have fewer vintages might be given less less rope to kind of work with for making bad investments.

And so I think you you're going to see a consolidation of mid-market firms going away. it's going to continue to push more and more uphill towards the the well either downhill to new startups that didn't get hurt by the AI stuff or by the you know the incumbents uh the blue chip kind of the mega alts and so I think mega alts are going to be beneficiaries of taking share within private equity and alternatives but also taking share from passive in a world where business and economy is rapidly evolving because of AI you could make the case owning passive gets gets harder right?

Do you really want to own all the businesses that are AI losers? Don't you want active managers to select for you the businesses that could really do well based on making investments in AI and be AI winners?

So I and and there's there's lots of other reasons I think it's interesting also, but I think the mega alts are going to be AI winners long term. And so that's that's three ways it manifests in the portfolio today that I could think of offhand.

if we're competing in KKR bid something like they've got decades of data that AI has scraped and we do not like I guess they have huge advantages there, huge advantages talent, all that sort of stuff.

the high net worth retail channel is just starting to take off that could be a massive opportunity for them KKR has the largest Asia alternatives business globally but a inst institutions have a very low allocation to alternatives in Asia today relative to like the US where lots of institutions are 25 30 40 50% allocated to alts and privates in Asia you're looking at probably a mid to high singledigit percentage of institutional capitals allocated to alts so there's massive growth ahead there KR will benefit from that as the largest Asian alternative asset manager Europe is similarly underpenetrated not as much as Asia but below the US they have a big European business um I in there's a lot of growth ahead in the US in credit infrastructure and real estate for KKR specifically to catch up to the Blackstones and Brookfields of the world and those in those uh strategies and then even their most legacy most mature US private equity business is still growing at a nice clip.

So lots of growth ahead from lots of different avenues.

I think the private credit scare gave me an opportunity to reinitiate a position in in a business that I sold a couple years ago at an attractive price.