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Financial Times / Biz - Money

KKR positions successors to Henry Kravis and George Roberts

KKR has lined up two executives to succeed Henry Kravis and George Roberts, the co-founders of the $138bn buyout group who helped to develop the private equity industry in the 1980s.

In a rare move for an industry where succession plans are not usually set out publicly, Scott Nuttall and Joseph Bae have been appointed as co-presidents and co-chief operating officers and members of the private equity firm’s board of directors.

Long rumoured to be favourites to fill the founders’ shoes, Mr Nuttall, 44, and Mr Bae, 45, will be in charge of day-to-day operations.

Mr Kravis and Mr Roberts, who are both in their early 70s, will continue to lead the group as co-chairmen and co-chief executive officers. The pair founded KKR in 1976, but came to prominence following the $25bn RJR Nabisco buyout in 1988 that was featured in the bestselling book, Barbarians at the Gate.

This is the first time KKR has openly indicated clear successors to the founders. The appointments were “about the future” as KKR looked to make sure it had the “right team” to serve its clients “for decades to come”.

George Roberts (left) and Henry Kravis will continue to lead the group they founded

The move will add pressure to other buyout groups, whose founders are reluctant to relinquish power, to outline their own succession plans.

Mr Kravis and Mr Roberts said: “Having joined the firm together over 20 years ago, Joe and Scott have a strong foundation of trust, professional respect and personal friendship that is critical for success.

“They think and act globally, they embody KKR’s core values, and they are two of our most accomplished business leaders, with proven track records of managing large teams, building new businesses and driving value for our fund investors and our public unit holders.”

The executives will have different areas of primary responsibility, KKR said in a statement.

Profile: Scott Nuttall
Profile: Joe Bae

Mr Nuttall will concentrate on corporate and real estate credit, capital markets, hedge fund and capital raising businesses together with the corporate development, balance sheet and strategic growth initiatives.

Mr Bae will focus on global private equity businesses and real asset platforms across energy, infrastructure and real estate private equity.

As part of this transition, Alex Navab, who had been rumoured to be a possible successor to the founders, is stepping down as head of Americas private equity and will retire.

Private equity investors have grown increasingly concerned about succession with just 12 per cent of funds set to close in less than a decade.

The worry has intensified as limited partners — pension plans and other institutions that lock up their capital in private equity vehicles for years — cut back on under-performing managers.

This is the first time a private equity group has set out an explicit succession plan. Others, however, have hinted at successors. In an interview last summer, Stephen Schwarzman, Blackstone’s co-founder and chief executive, said that Jon Gray, head of its real estate unit, was “part of our succession plan”.