KKR’s top real estate and infrastructure executives have been elevated to new roles at the firm as part of a restructuring of the two businesses into a combined real assets group, according to a memo sent to investors and seen by PERE.
Raj Agrawal, formerly global head of infrastructure, has been promoted to global head of real assets, overseeing both KKR’s global real estate and global infrastructure businesses, which represented $157 billion of assets under management across equity and credit as of September 30.
Ralph Rosenberg, previously the firm’s global head of real estate, will now become chairman of real assets, the memo stated. The infrastructure business will continue to report to Agrawal, who is based in Menlo Park, California, while the real estate business will report jointly to Agrawal and Rosenberg, who is based in New York.
PERE understands no other leadership changes have been made to the teams at this time. Additionally, while both businesses will come under the overall real assets platform and its teams will work more closely under the shared leadership structure, they will continue to operate as standalone, rather than fully integrated, units.
“Our commitment and conviction in the future opportunity for our infrastructure and real estate businesses has never been stronger,” the two executives wrote in the memo. “Our complementary experiences and skill sets will enable us to work together to run our scaled businesses more effectively.”
The New York-based mega-manager – which holds the 12th spot on the PERE 100 ranking – has been investing in real estate as part of its private equity strategy since 1981 but launched a dedicated platform for the asset class with the hire of Rosenberg in 2011.
Meanwhile, the firm formed its infrastructure business in 2008 in the wake of the global financial crisis. Agrawal joined KKR in 2006 and previously was a vice-president at New York-based private equity firm Warburg Pincus, where he helped to execute and oversee a number of investments in the energy and infrastructure sector.
Both KKR’s infrastructure and real estate units have grown more than fivefold over the past five years. Over that time period, the real estate business has scaled from $15 billion to $80 billion in AUM and employs more than 145 professionals globally. One of the team’s most recent deals was a joint venture with Boston-based manager The Baupost Group to acquire 33 Marriott International hotels from the Abu Dhabi Investment Authority, announced in December.
Meanwhile, the infrastructure group has expanded from $13 billion to $77 billion in AUM with a team of more than 130 professionals worldwide. Earlier this month, KKR announced a strategic partnership with Gulf Data Hub, a Dubai-based data center platform, representing the former’s first data center investment in the Middle East. Also this month, the firm agreed to purchase a 19.9 percent interest in American Electric Power’s Ohio and Indiana & Michigan transmission companies for $2.82 billion, in partnership with Canadian pension investor Public Sector Pension Investment Board.
Long-time category
While real assets is a newly formed platform at KKR, it is not a new investment category for the firm. The manager has reported quarterly on real assets – encompassing real estate, infrastructure and energy – for more than a decade, since real estate first appeared as a business in the publicly listed firm’s Q2 2013 earnings results. Prior to that, energy and infrastructure was a dedicated category in the firm’s earnings reports.
In their joint memo, Agrawal and Rosenberg pointed to the “already strong investment team collaboration in data centers, logistics and other areas of mutual interest.”
One of the most high-profile collaborations between both teams to date was KKR’s acquisition of data center operator CyrusOne with Global Infrastructure Partners, now part of BlackRock, in March 2022. In an Investor Day presentation in April, Rosenberg spoke about the significance of the transaction for KKR: “It demonstrates this ability to connect the dots across the firm, to leverage expertise and to find a convergence of where this expertise can create real value for our LPs, and also it demonstrates the ability to do very, very large deals that touch commercial real estate.”
More recently, the businesses also worked together on the formation of a $50 billion strategic partnership with Energy Capital Partners, the largest private owner of power generation and renewables in the US. The partnership, announced in October, will focus on scaling the development of data center and power generation and transmission infrastructure for the expansion of artificial intelligence and cloud computing globally.