KKR creates a unicorn & bets $500M on flipping housesJune 12, 2019
But on the same day, KKR also put hundreds of millions of dollars to work in a pair of other deals that could indicate where the firm's future lies.
First, the New York-based investor led a $300 million investment in cybersecurity startup KnowBe4, valuing the creator of a simulated phishing platform used for security training at $1 billion. Existing backers Elephant and TenEleven Ventures also partook in the funding, which came barely three months after KKR led a prior investment in KnowBe4, valuing the Florida-based business at $800 million in March.
Capital for KKR's backing will come from its Next Generation Technology Growth Fund, a $711 million vehicle that closed in 2016. The fund was the first of its kind for KKR, with a focus on growth deals in the tech, media and telecom (TMT) space—a clear move toward emphasizing deals at earlier stages than the firm has traditionally been associated with. The firm has also used the fund to make minority investments in companies like Lyft and Ivalua, which makes spend-management software.
In Wednesday's other move, KKR tacked another $250 million onto its existing commitment to Toorak Capital Partners, an investment company that buys short-term "flip" loans made to speculators who fix and resell homes. The move takes KKR's total stake in Toorak to $500 million, following an initial $75 million investment in 2016 and a re-up in May 2018.
Toorak currently owns around $1.5 billion in flip loans, according to The Wall Street Journal, and KKR's new backing will allow the firm to double its holdings in the sector. While such loans can be risky, they can also come with the prospect of proportional returns. KKR isn't the first Wall Street giant to dip its toe into the space: Early last year, Goldman Sachs finalized a takeover of Genesis Capital, a Los Angeles-based firm that lends cash to house flippers.
When most people think about KKR, the firm's buyout activity and its role as one of the original barbarians at the gate are probably what first come to mind. But it's worth remembering that, these days, that's far from a complete picture. The firm is a publicly traded corporation that invests in startups, fixer-uppers, debt and a bunch of other things, in addition to its usual leveraged buyouts. KKR and the industry's other powerhouses are now about a lot more than just traditional private equity.
Featured image via Creatas/Getty Images Plus
Related read: A day in the life of a managing director at KKR
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