KKR toasts another employee ownership case study; adds capital to latest impact fund

KKR has achieved a 6x average return across three companies where it has implemented employee ownership schemes.

KKR has created another exit case study for employee ownership: the sale of audiobook publisher RBmedia will result in cash payouts to non-management employees of 100 percent of their annual income, on average.

KKR announced the planned sale of the company to HIG Capital last month. The sale will generate “significant cash payouts” to all RBmedia employees, head of investor relations Craig Larson said on the firm’s Q2 results call yesterday. “Most tenured employees [will receive] two years of their annual income.”

KKR has been a vocal proponent of employee ownership initiatives at portfolio companies and has introduced shared equity programmes to 30-plus businesses in its US private equity business. Other recent case exit case studies include CHI Overhead Doors and Minnesota Rubber and Plastics. Across these three exits, KKR recorded a 6x average return on cost of capital, Larson said yesterday. CHI Overhead Doors returned 10x its cost of capital, KKR announced last year.

The concept is gaining some traction in the wider private equity market. French industry association France Invest has formal targets in place for widespread adoption, while Ownership Works, a non-profit organisation, is promoting the concept to US GPs and LPs.

In other KKR news…

KKR Global Impact II raised nearly $100 million over the second quarter of 2023. The fund, first registered in June 2021, has $2.19 billion in committed capital in KKR’s Q2 2023 results. It stood at $2.10 billion in the Q1 results this year, and $1.98 billion in the 2022 year-end results.

Seven percent of the fund has been committed by KKR, and the firm has not called or invested any of the capital, KKR’s Q2 results show. Global Impact I closed on $1.3 billion in February 2020, above its $1 billion target, after launching in August 2018. A total of $265 million from the first fund remains uncalled.