As co-head of private credit for KKR, Dan Pietrzak is arguably in one of the hottest areas of the global credit markets. Borrowers increasingly favor private debt solutions, think of it as a direct loan between two parties, or a small club of lenders rather than syndicated loans and bonds, which are at the mercy of fluctuations in public markets.
And this month, his team led by co-head Matthieu Boulanger closed a $2.1 billion asset-backed Financial Partners Fund, or ABFP, something that has long been on the agenda. by Pietrzak.
Since joining KKR in 2016, Pietrzak has helped the company disburse more than $6 billion in 54 asset-based financings. But it took until this month for KKR to close its first fund dedicated to crafts.
Asset-based financing commits capital to private credit investments that are backed by large collateral pools. It is a convenient investment in a volatile market as investors may reclaim these assets which could include music royalties, aircraft or real estate among others if a borrower cannot repay debts.
“In the environment we’re in, you want to be a downside protection adept. I also think if you have a loan portfolio, for example backed by residential real estate or property aviation, it will behave differently than the corporate credit market,” Pietrzak told Insider in an interview.
Last August, Pietrzak spoke about his love for asset-backed transactions, and since then he has clearly dug his heels in the industry. KKR’s private credit team now has 35 people dedicated to trading ABF and has hired two managing directors in the past two months.
Kristy Gilbert joined the team in June from Sightway Capital to focus on scaling investments globally. RJ Madden joined Angelo Gordon in July to lead KKR’s residential real estate efforts, a spokesperson for the private equity firm told Insider.
“We’ve now put together this dedicated team, and that’s their only goal,” Pietrzak said. “We’ve also gotten to the point where investor interest in ABF is quite high, so those two things marry quite well when it comes to raising a standalone fund.”
Although Pietrzak could not disclose the names of the investors in the fund, he said it included commitments from public pension funds, asset managers, insurers, sovereign wealth funds, commercial banks and family offices.
The ABFP portfolio focuses on consumer and mortgage-related finance, durable assets like aircraft, and assets with contractual cash flows. Pietrzak said around 60% of the fund will be deployed in US assets, while 40% will be concentrated in regions like Europe and Australia.
“I still think we’re probably in the early innings,” Pietrzak said of the wider adoption of ABF solutions. “But it’s a good thing for us, we’re kind of ahead of the curve. We’ve been doing these deals since 2016.”
