KKR & Co. Inc. (KKR) Earnings Call Transcript & Summary

Great. Well, good morning, and welcome to the Goldman Sachs' 35th Annual Financial Services Conference. I'm Alex Blostein, and I lead capital markets research here at the firm. This year, we're looking at record attendance with about 900 investors and 400 companies participating in the event. Over the course of the next 2 days, we'll hear from over 100 executives across financial services industry about trends that are shaping our industry and the outlook for 2025. We really appreciate everybody's business. Thank you all for being here. And to kick us off, I'd like to welcome Scott Nuttall, Co-CEO of KKR to get us started. Thank you all. All right. Good to see you.

Good morning, everybody. Thanks for showing up early.

Yes, people are here for the bagels.

Right. Exactly.

Great. Well, look, for -- just to level set, by way of background, KKR is one of the largest and one of the fastest-growing global alternative asset managers with over $600 billion in assets under management across private equity, real assets and private credit. KKR had a very active year, delivering strong investment performance, raising $87 billion of capital and deploying over $60 billion into new investments through the first 3 quarters of the year. The stock had also had an amazing run, think about 80-plus percent year-to-date. A number of milestones, including the S&P inclusion, which, of course, is very important. So we look forward to chatting with Scott about the environment, his expectations for the space and for KKR into '25. So again, thank you so much for being here.

Thank you for having me back. It doesn't feel like early December unless we're up on the stage together.

Yes.

Nice to have...

We'll keep it going.

So let's start with a bit of an outlook into 2025. And the way I want to frame it is KKR had an Investor Day earlier this year, set quite meaningful targets. You guys talked about a multiyear target of $7 to $8 in earnings per share in '26. That's 30% 3-year CAGR. You're well on your way there. If you kind of look at where Street is modeling for this year, it implies about 30%. So why don't we get started with your key priorities for 2025 as you look to execute on this path?

Sure. I'd say there's a few things that jump out. One, we do feel like we're going to have a more robust environment heading into next year. So I'd say the first priority is just to monetize the environment that we see coming. And that means deployment, monetizations and fundraising. So we want to make sure that as we sit here together a year from now, we look back on 2025 and feel like we've taken advantage of what's on offer and what's coming our way. The second thing that I'd point to is private wealth. And we've talked about this in the past, Alex, but we have been launching our private wealth products over the course of the last 12, 18 months. It is still early, but we see a significant ramp ahead of us. We also created a partnership with Capital Group that we'll launch next year as well. So I think that will be a big opportunity. The third thing I'd point to is insurance. We bought the 37% of Global Atlantic that we didn't already own. That transaction closed at the beginning of this year. So this is the first full year we've been able to actually work with GA in full. So think investing with KKR across multiple new asset classes and thinking about geographies around the world to be more consistent with KKR's global footprint. So that's the third opportunity I'd point to. And then fourth is what we're doing -- what we're calling Strategic Holdings. That's the third segment that we introduced, and we spent a lot of time on this in the Investor Day in April. I want to execute the plan that we put in front of everybody. There's lots of opportunity to ramp the recurring cash flow we're getting from that portfolio. But we think there's even more upside the more time we spend on that topic. So those would be 4 things I'd call out. There's probably 20 others, but those are -- those are the big ones.

Got it. Well, let's touch on the first one, I guess, and just bringing it to some of the current events. After the U.S. election, there's clearly been a lot of enthusiasm in the markets around what the new administration could mean for financial regulation, but also as a byproduct of that, just the pace of activity in the marketplace and the market seems to be obviously quite excited about that. KKR had already seen a pretty meaningful pickup in activity this year, which saw you guys deploy a lot of capital. Realizations started to pick up a little bit as well. How have your deal pipelines have actually changed, if at all, post November election? And as you look out into 2025, maybe spend a couple of minutes how you're thinking about pace of capital deployment on both deploying and realizing?

Sure. You're right. So our pipelines are up as the short answer to your question. And we came into this year -- so last year was a bit of a strange year, right? Valuations were low, but people didn't want to transact. We came into this year, the leverage credit market started to open up. The M&A market started to turn back on. In our experience, it takes about 6 months for the M&A market to turn back on. We started to see that activity pick up. So to your point, our deployment year-to-date is up 2x. And then what happened is people got a little bit focused on the election. And so maybe it slowed down a couple of processes as people tried to think about what does all this mean. And so some things went on pause. And now people are a little bit paused for the holidays. And then our expectation is you're going to see things pick up pretty meaningfully as we head into the next year because you're going to have the M&A environment more fully on. Hopefully, the leverage credit markets continue to be supportive. And so our expectation is that you're going to continue to see deployment activity continue to ramp and it could be in a meaningful way, but time will tell. We've been really active this year already, as I mentioned. And it's been a handful of areas, but I'd point out infrastructure. It's an area we went from $13 billion to $77 billion of AUM just in the last 5 years. So we've got a large meaningful portfolio and a lot of activity globally. Just our data center portfolio, to give you a sense, on a 100% basis, it's $150 billion of enterprise value and needs a lot more capital. So there's opportunities to deploy in what we're already doing and there's a lot of new investment deployment opportunities as well. Credit. We talk a lot about Private Credit. I'm sure we'll talk more today. But asset-based finance, our AUM there is now $65-plus billion, up 40% this year alone. A lot more opportunity there. Japan market, I would call out. We have over 200 investment executives in Japan today. 200 people on the ground, finding opportunities. It's been private equity and real estate, but increasingly looking at infrastructure, credit and insurance. So that's a massive opportunity for us just in that one country. So as we step back on the deployment side, we have $108 billion of dry powder as we sit here today and we're heading into a constructive environment. On the monetization front, same story. I mean, our monetizations are up 60-plus percent so far this year. We have probably a bit of a different dynamic than others. We've been very focused on steady deployment pacing. So we did not over deploy in '21 and '22, like some others. So we have a very mature portfolio. So the way to think about it, a lot of things we didn't want to sell in '23 are mature, in the money and we have an ability to monetize as we head into '25. And so our embedded gains are up 40% this year. Our monetization, as I said, are up 60% already this year. And everything I've talked about on both deployment and monetizations are before the election consequences. So we're pretty optimistic heading into next year.

Great. With more capital market activity and as more capital comes back to LPs, the fundraising outlook hopefully gets a bit better for the industry. You guys have been on a strong path as it is. In terms of the targets, you talked about $300 billion of capital to be raised through 2026. I guess, based on even results year-to-date, you're well on your way there. So the firm is going to be in the market with several flagship products in '25 in addition to kind of your regular way fundraising. So based on the reception you're seeing from LPs, what are your thoughts on both sizing these flagships and maybe broader comments on 2025 fundraising?

Sure. I'd say the same theme when it comes to fundraising is on monetization and deployment. You said it before, we raised $87 billion year-to-date. It's kind of 2x the prior year. And if you kind of step back, what really matters, we've got to have great investment performance. And our investment performance remains really strong. So we're getting very positive feedback across asset classes on that topic. And the flagships get a lot of focus, but just let's put some numbers around it maybe over a slightly longer period of time. Last 12 months, we raised $118 billion. $11 billion of the $118 billion was in flagships. That's it. So sub-10%. Now when the flagships come on, I would think of that as an and on top of a big number, okay? So 2020 and '21, flagships were $60 billion, 6-0, of fundraising. Last 12 months, $11 billion. So we see opportunities to raise capital across asset classes and vehicles. And the way I would think about it is with the flagships coming back, that will just create that and moment that we have every handful of years. So it just so happens that's going to come in, we think, the relatively near term. We've launched a couple of them. There's more coming. And we think we got the timing about right. Sometimes you got to get a bit lucky in terms of when you're coming back with these flagships. But if we're right about the M&A environment, and therefore, the monetization environment, that will be a positive for the fundraising environment broadly defined. And so we feel like there's quite a bit of opportunity for us, but it's not just flagships. It's everything I talked about. And then think about it, we haven't really had private wealth show up to a great degree yet. So we've got that as upside as well. So think of the $118 billion, not much flagship, not much private wealth. Now we've got flagship, private wealth and all the regular way that led to most of the $118 billion to begin with.

Right. Let's unpack a couple of these kind of bigger fundraising themes, and I want to spend a couple of minutes on sort of evolution of the institutional channel. Over the last couple of quarters, you've highlighted opportunities in forming longer-dated strategic partnership with several institutions on a multiyear kind of capital recycling basis. I think you highlighted $3 billion example as of the last quarter. I guess what's driving this renewed appetite from LPs? And what does your pipeline there look like? Maybe speak to the typical structures. And at the same time, do you think these vehicles could live side by side with your regular institutional flagship business? Or is there risk of that cannibalizing some of this kind of higher fee flagship dynamic?

Sure. Let me take the last question first, then I'll come back. They exist alongside the regular way fund business. And oftentimes, these partnerships actually are structured to invest into the funds themselves. So think of it as structured to not cannibalize. Now let's back up. So what's going on? There has been absolutely a theme we're finding with institutional investors around the world that they want to do more with fewer partners. And so what had happened kind of pre-financial crisis, you had people diversifying the number of relationships they had. So you'd have LPs that were in hundreds of GPs. Financial crisis happened, they didn't realize who they were invested with. They didn't realize what they owned and everything went down at the same time. So we came out of the GFC with the LP community, especially the more sophisticated institutional LPs, having learned from that. I think, you know what, I want to have fewer partners, but I want to do more with them. So it's almost like a core satellite approach. So they've come to us and said, "Look, I want to give you more scale capital at KKR. But if I give you that scale capital, I want to make sure that I have slightly better terms than if I did this regular way." And what we say back to them is like, "That's fine, but then there are certain things that we want for our business model as well." And so the example that you're referencing, it's a $3 billion real asset strategic partnership. So think it's across infrastructure and real estate. And to your question on attributes, there's a couple of -- all of these are bespoke, but there's a couple of things they tend to share. One is scale. So most of these are $3 billion to $5 billion-plus each. Most of them -- almost all of them have recycling. So think you recycle capital plus a percentage of the profits. And they have duration. So many of these are structured to live 20, 30 years or beyond. This one is 20-plus years, the one we announced last quarter. And so what we've tried to do is continue to evolve how we work with LPs to make sure that we're meeting them where they are, which is they want to do more. And what they get in exchange is they have visibility on deal flow, right? And they also may get a bit of a discount on economics. But for us, in a revenue context, we come out much better in terms of aggregate revenue dollars. And all this fits in the theme. So 91% of our AUM is perpetual or 8-plus year in life. So this is just another way to add to that number.

Great. Let's shift gears a little bit and talk about Private Credit. It's been probably one of the biggest themes for alts and one of growth themes for financial markets for the last couple of years. It remains an important, obviously, a priority for the firm as well. You talked about even earlier today expansion of your asset-backed finance business, it's over $65 billion in AUM. When we look at KKR's Private Credit business, still a meaningful portion is related to 2 big kind of pools of capital. It's GA relationship and your publicly traded BDC. Can you talk a little bit about how you expand that to more third-party customers, the views on expanding both the asset-backed finance franchise as well as other forms of private credit?

Sure. So high level, manage about $106 billion in Private Credit now. $66 billion or so in asset-based finance, $40 billion or so in direct lending. You're entirely right, we have prioritized perpetual capital for all of our businesses, but including Private Credit. So that's why the BDC, that's why Global Atlantic, so that we have long-term visibility. The episodic fundraising business for Private Credit is a very nice business, but it tends to be lower-duration assets. So the AUM runs off faster. So we have prioritized perpetual as a result. And there's no doubt digesting GA, which is now $180 billion of AUM probably required some focus from the team for a while. But we purposely prioritized perpetual, which we'll continue to do. Now that we've got kind of digested Global Atlantic and FSK, we are more front-footed and focused on the third-party fundraising. So you'll continue to see us more active there. And it will be across multiple different areas. There's funds. There are separate accounts. We have been focused on the evergreen vehicles so that you don't have the episodic nature and back to market. The capital -- the inertia works with you. As long at the client's happy, the capital stays with you. So we've kind of evolved in that market. That doesn't always show up in our fund tables. So we should make sure you have full visibility on all that. We've also now launched our private wealth, our K-Series product for Private Credit, U.S. and non-U.S. And then also, we've got Capital Group, which, as I said, is launching probably in the spring. We're on file right now. So -- and those first 2 products are Private Credit in partnership with them in this hybrid structure. So there's a lot of opportunity, we think, to raise third-party capital. And it's levered, it's unlevered, it's kind of high grade. We have $63 billion now from third-party insurance companies. There's a lot of demand there. So I think you'll continue to see that area grow organically and where we find opportunities for more perpetual inorganically.

Right. One of the important factors when it comes to asset-backed finance is obviously proprietary origination and really coming back to market with something unique. Can you spend a couple of minutes on that, especially as you further expand your capabilities within asset-backed finance? What do your origination engines look like? What kind of partnerships you guys either have today or considering in the future?

Well, this is a business that to really understand, you have to understand the company that we've created through which we operate. So we have 18 platforms that we've created. They have 6,700 employees. So think of these as management teams, some of which came out of banks or otherwise, that we have backed. And they are creating deal flow that comes into our investment committees. And so that opportunity set, that's just in what we today call asset-based finance. We also have 16 more platforms in our real estate business, which is also an asset-based structure. They have 1,000 employees. So we're approaching 7,500, 8,000 employees, outsourcing deal flow for those parts of the firm every day. And that's just creating this kind of constant origination flow that we can pick and choose from. And then what we're doing is we're figuring which relationships fit which deal flow. I mentioned the third-party insurers. So we're talking to them about this army of people that we have out originating. That creates a real competitive advantage for us. You have to have feet on the street to be able to do this well. This isn't sitting at the desk and waiting for a bank to call. You've got to be in the market. And so we've been investing in that approach since 2016 and we see a significant amount of opportunity ahead. We've also been doing this U.S., Europe and we haven't talked about it yet, but Asia credit is also an evolving opportunity. It's a smaller business for us now. But as we look at the penetration of private equity and Private Credit in that part of the world, if you think about our 9 offices, our roughly 600 employees in Asia, that is another big opportunity that I'd point you to. And over time, I wouldn't be surprised if ABF also attracts capital in that market.

Yes. And I guess, more importantly, not super dependent on the bank channel that originate, which is critical. All right. Let's pivot and talk about wealth. Huge theme for you guys. Huge theme for the space. We all know the stats. The addressable market is very large, and you and your peers are executing well against that. I really like the way you framed it, both today and just in general, the way you're attacking the market in kind of 3 verticals. You have the K-Series. You have your regular way kind of funds for more affluent client. And then you launched the partnership with Capital. So we'll kind of unpack all of those. On K-Series, you guys are now managing about $14 billion it's AUM. It's up from, I think, just $5 billion a year ago. So off to a really nice start with Infra and private equity driving the bulk of that flow. So let's spend a couple of minutes on what your product pipeline looks like on anything new that you guys are thinking about? And more importantly, how are you thinking about the distribution landscape from those products?

Sure. This is still really early for us. I mean, we're just getting started in this space. And to your point, it's massive. So this is a significant go-forward opportunity for the firm. And so we have now launched, but it's been really over the course of the last 12, 18 months, private wealth products in all 4 of our key investing areas. So private equity, infrastructure, real estate and credit have all been launched. And then what's happening is every month, from my seat, every month we're adding more platforms, right? So we're now by the end of this year on 120 different platforms. So if you had 4 products on a platform, that counts as 4. That number is ramping significantly. And then once you get on a platform, it takes time to start to see flows. So we're going to just see it ticking up, more and more activity all around the world across all of those different areas. So the short answer to your last question is we don't need to add a lot more. And we spent a lot of time in the lab making sure that we've got the right product design, and then we've been building these partnerships around the world, which we're just starting. We've also been investing in our sales and service team. And so they've been ramping as well. So think of it as more products in the market on more platforms with more members of our team who are up to speed, and we're spending a lot of time on adviser and investor education. And so all of that is happening. Not much of that is in the numbers yet. Obviously, in the context of our firm, the numbers you mentioned are pretty small. There's a significant amount of upside to those numbers as and when we perform. And it's important to understand, we spend a lot of time. We spent 2 or 3 years trying to get this right in terms of product design because the way I looked at this is unless I would tell my parents they should buy this, we aren't going to do it, period. So it has to be the same deal flow that everybody else we're working for get. Not all firms have done this the same way, right? So we spend a lot of time trying to make sure it's first in the waterfall. So if you read about it in the Journal or the FT, you get it if you're in that private wealth product. That's how we structured it. Obviously, brand helps a lot. I think relative to what we talked about in institutional land, there is going to be a larger percentage of the market share that will go to fewer players for obvious reason. And then you need to actually have the resources to do this. Well, this is a ground game. So you need to have people on advisers' offices around the world, and you need to make sure that you're spending time on things like investor education and delivering the whole firm. And so we spend a lot of time getting ready for that. So it's super early days, but it feels really good as we sit here right now.

As you look at that distribution ramp that you mentioned, can you give us a sense how many larger wires are you on today? And what kind of the next steps is? Like are you looking at independent broker-dealers, RIA channel? Kind of where are you focusing your attention?

You nailed it. I mean, for the obvious reasons, focus on wirehouses first where we've launched. And then you start to focus on RIAs, IBDs. You start -- you got to think about this top-down, right? Where is the capital? How is this going to continue to evolve, right? So most of the products in the market are focused on what's called in the U.S. qualified purchasers, QPs. Let's call it, $5 million and up in net worth. We spent a lot of time making sure we could design ours to go not just to QPs, but to accredited investors. We used to call it AI. We can't use that term anymore. So accredited investors, let's call it $1 million and up in net worth, right? So that is a bigger market than the QP market, right? So we designed ours, and that's part of the reason it took a while, to be able to get to that whole space. So that's really important. So that allows us to go broader just with the K-Series. But as we come on to things like Capital Group, just so you understand the strategic thought process, right? If you add up QP and accredited investors, you're still sub-10%. Let's just pick on the U.S. households, right? So you're still leaving 90%-plus of households that you cannot sell to even with the K-Series, right? And that's what we call our wealth product. And that's part of the reason that we created the partnership with Capital Group. So you have access to that broader mass affluent market, which is the next step for us. So we've really tried to build this product suite to be able to be relevant to everybody that's managing their own retirement wealth and has an interest in alternatives.

Yes. So you mentioned capital, let's just touch on that for a minute. A unique partnership. I don't think anybody has really announced anything of this size and magnitude with 2 really big brands in the space. What's the plan from here? So you have 2 products that will be out in the market early next year. Are you getting any feedback from future distributors? Kind of how has that news been received? And what sort of next? Should we expect more kind of products to evolve on the back of what you're launching?

Sure. A lot of interest and excitement in what we're doing. And so to be clear, what we've done is we've created a partnership with Capital around what we're calling hybrid products, so think of anything that has a public and a private in one structure. And so we've started -- we filed with 2 credit products. It's going to be 60% Capital regular way bond funds and 40% us and Private Credit, combination of direct lending and asset-based finance. And so the feedback has been really positive. And so we're on file. We haven't launched yet. But so far, it's been great because a lot of the aspects of this market, they've been waiting for somebody to have a way to bring them alts in a way that's easy to own and easy to invest for this very broad audience. So we've been really encouraged by the feedback thus far. And then I think what you're going to see us do is roll this out. We're not stopping with these 2. So you'll see versions of this, private equity, infrastructure, real estate and beyond over time as we think about more that we can do together and as we learn together as we roll this out.

Yes. One of the themes that's been coming up in the last month, 1.5 months or so has been 401(k). And there's just like with respect to capital markets activity post the election, there's been this renewed optimism that maybe we'll see changes in the regulatory environment that could open up the 401(k) channel to private managers, which, of course, nobody has really participated in that space in the past. So I guess what are your thoughts on this? What do plan sponsors administrators really need to see on the regulatory front to get more comfortable with including some of the private vehicles in the 401(k)? And how realistic do you think that is as part of your addressable market?

Look, it is a big opportunity. And as best we can tell, more than 60% of 401(k) flows are going to target-date funds. So in terms of the question about the plan sponsors and the administrators, they're clearly going to need some comfort for themselves from a litigation risk and otherwise standpoint. So maybe some development of a safe harbor or something that gives them the comfort that they need that's out of our control. That's certainly our hope and expectation that you'll see that develop over time. It just makes sense. People are saving for retirement in this target-date format. They're thinking about their asset allocation decades out. Not having private markets as part of that solution just isn't really sensible. So let's presume that the market evolves in a way that allows us to get there. Whether it's in regular way format or insurance structured format, we can win both ways. That's how we've thought about it. And I would point out, as we think our way through all this, Capital Group has a large and fast-growing target-date business. And so that's one of the things you'd expect us to be talking about with our partner.

Yes. Great. All right. Let's talk a bit about other businesses you guys have established starting with maybe the Capital Markets business, which has been around for a while, but the ramp has been quite impressive. I think this year, you guys are on track to do about $1 billion of revenues in this business. The firm clearly benefited from a couple of sizable transactions this year. But I think it just still underscores just the magnitude of potential upside in a capital market cycle that's a little more supportive. So help us maybe frame the opportunity you see for KKR's Capital Markets fee pool over the next couple of years? What would you kind of tie that to? $1 billion of revenue is obviously great this year, but what is the ultimate size of this business could get to?

I think there's a lot of upside. You're right, we had a big Q3, as an example, $424 million of revenue. But there were 100 different transactions that made that up. So you are going to have some larger ones from time to time, but there's a lot of breadth to what we're seeing. Now our Capital Markets business and the revenues associated with it are pretty closely tied to the activity levels of the firm, right? So go back to the beginning of our conversation, if we're right that you're going to see deployment and monetization continue to ramp up, that's right way revenue opportunity for Capital Markets, simple way of thinking about it. And we also have the third-party business on top of that. So as we see third-parties be more active in M&A and financings, that's also more revenue opportunity for our Capital Markets business. And so this business started really working with our private equity business on equity syndications and then expanded to debt. Now it's working across private equity, infrastructure, real estate, credit and third-parties. There's also a big opportunity with Global Atlantic, right? So one of the reasons that we went to 100% was to be able to capture that opportunity. And I think it's hundreds of millions of dollars as we get this right. We are just getting started. And the first transaction we did, as one example, where GA anchored a deal for one of our portfolio companies, over $25 million in fees from one deal. So we have proof of concept, but there's a lot more ahead.

Great. Well, you mentioned GA, so let's talk about that for a minute. A bit of a more muted growth this year, and I know you guys have gone through couple of portfolio repositioning dynamics. But first, maybe we can start with just your outlook for organic growth in that business, the key drivers as well as any expectations for block activity at GA over the next 12 to 18 months. And as you look a little bit further out, where are we in sort of rotating some of the higher-yielding, higher-returning assets into that book to get the ROE back up closer to your targets?

Sure. So I'd say a few things. One, we did purposely bring down our returns this year in service of the longer term. So we did 2 $10-plus billion blocks around the beginning of this year with -- knowing that it was going to take 12 to 18 months to redeploy that capital. And so we're in the midst of that rotation. So that's happening as expected, but that's not a surprise. We also went to 100% ownership in part to be able to work across the rest of our investing businesses. So think infrastructure equity, maybe real estate equity from time to time. If you think about those types of investments, it doesn't all show up in current return, right? There's going to be some upside that's largely probably captured on the back end. So there's 2 things happening this year at the same time, okay? Both of those will start to get run rated in due course. The way that $20-plus billion is rotated, you'll see those earnings start to come back into the income statement. And then as we start to exit some of the investments that we're making that have a combination of yield plus maybe more variable outcome on the back end, you'll also start to see that get run rated. This is a very purposeful moment for us. We see a lot of opportunity to continue to evolve GA's strategy, working that much more closely with KKR. And then the other thing I'd point out, as you think about Global Atlantic, there's a tendency to focus on the insurance segment and I understand it. But you've got to think -- keep in mind how much economics also show up in the asset management segment. So there's management fees, obviously, but as we scale the Capital Markets activity, like I mentioned, that shows up in asset management. And so as we think about the holistic profitability of the insurance business, that's how we think about it.

I got you. Great. So let's pivot then in the last couple of minutes here. I want to spend a few minutes on capital management. One of the stats that I think grabbed a lot of attention from investors was the $25 billion number plus of capital generation that you guys expect over the next 5 years. You spoke very much in kind of broader strokes about kind of strategically allocating that capital into kind of highest ROE activities, which again makes total sense. But if you look over the next 12 to 18 months, what does that look like? Where do you think you'll find some of these higher ROE activities?

Sure. So I think the way we think about it is probably 4 big areas where we're going to deploy capital. It will be in Strategic Holdings. So think of investing in either more of these core longer-term hold names or things that fit those attributes; insurance; there's strategic M&A, the third; and then there's buyback. And so that's how we look at it as a management team. And as we look at the kind of the body of work of what we have done, we've been active in all of those areas, as you know. And so I think over the relatively near term, I don't think you're going to see a lot of strategic M&A in the asset management context. We -- as a management team, we don't have a lot of interest in buying more runoff capital. If it's perpetual, like we did the J-REIT deal, KJRM in Japan. We're one of the largest REIT managers, that's perpetual capital. FSK, you mentioned our BDC platform, perpetual. Obviously, Global Atlantic, perpetual is how you think about it. If there's things that have those attributes, we might look at it. But if it doesn't, we're not going to spend much time candidly. And we can build it a hell of a lot cheaper than we can buy it. And that's how we've approached that thought process. So I think by process of elimination, it's probably down to the other 3 as some combination. And on buybacks, we've been really opportunistic, and we bought back 10% of our shares over time at a blended price of roughly $28. So as a body of work, we feel pretty good about that. And you should expect us to be opportunistic there and we're always looking for things to do. Think of us, we are the largest shareholder, so people inside KKR own nearly 30%. So we're going to approach it like you would, how do we create durable long-term scale earnings? And how do we grow the per-share price at infinitum at a really attractive rate? That's how we look at allocating that $25 billion in capital allocation broadly.

Great. Well, I think it's a great note to leave it on. Thank you, Scott, very much for being with us today.

Thanks for having me. Appreciate it. Thanks. Have a great holiday.