While the private credit market is booming, KKR is quietly making a trillion-dollar bet on a less flashy segment: asset-based finance (ABF). Recent earnings calls suggest the company is strategically building a colossal ABF empire, capitalizing on a retreating banking sector and creating a formidable ecosystem poised to dominate a vast, underpenetrated market.

From Whispers to a Roar: The Trajectory of KKR's ABF Origination

From Whispers to a Roar: The Trajectory of KKR's ABF Origination

The numbers tell a compelling story. KKR's ABF assets under management (AUM) stand at a staggering $50 billion. That's just a fraction of the estimated $5 trillion global ABF market, a market projected to reach $7-8 trillion. But the real revelation lies in the trajectory of KKR's ABF origination volume, which has exploded since the acquisition of Global Atlantic (GA).

This exponential surge indicates KKR is aggressively capturing market share. Recent moves like the $7 billion RV loan portfolio partnership with BMO, participation in the GreenSky platform acquisition, and the purchase of prime auto loans from a regional bank further underscore this strategic push.

Building an Ecosystem, Not Just a Platform

KKR's ABF strategy goes beyond building a large platform. They are constructing an ecosystem. With 19 specialized ABF origination platforms encompassing 7,000 professionals globally, KKR has created a formidable deal-sourcing engine. The acquisition of Global Atlantic, while widely seen as an insurance play, has injected this machine with a captive source of liabilities, further accelerating origination volume. KKR executives have hinted at the "symbiotic relationship" between GA and their credit business, suggesting a dynamic that extends beyond direct lending to encompass the broader ABF landscape.

A Double-Barreled Growth Engine

KKR sees this explosive ABF growth as a springboard for an even grander opportunity—a capital markets bonanza. The company envisions leveraging its expertise across private credit, liquid credit, and GA's balance sheet to tap into the vast ABF market for its capital markets business. This strategy has the potential to be a double-barreled growth engine, driving both asset management and capital markets revenue.

KKR's ABF: A Hypothetical Growth Trajectory

The following chart represents a hypothetical projection of KKR's ABF AUM growth over the next decade, assuming continued market share capture and successful execution of their ecosystem strategy.

While several factors, including regulatory changes and investor appetite, will influence the ABF market's evolution, the evidence suggests KKR is laying the foundation for a trillion-dollar empire. As the company continues to execute its strategy, the tremors in the ABF market are only going to get stronger. It's only a matter of time before the earthquake hits.

"Fun Fact: KKR's roots are in leveraged buyouts, famously taking RJR Nabisco private in 1988, a deal that inspired the book and movie "Barbarians at the Gate." Their current move into the ABF market demonstrates their adaptability and continued pursuit of emerging opportunities in the world of finance."