Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 14, 2023 | |
Class of Stock [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-56540 | |
Entity Registrant Name | KKR Private Equity Conglomerate LLC | |
Entity Incorporation, State | DE | |
Entity Tax Identification Number | 88-4368033 | |
Entity Address, Street | 30 Hudson Yards, | |
Entity Address, City | New York, | |
Entity Address, State | NY | |
Entity Address, Postal Zip Code | 10001 | |
City Area Code | 212 | |
Local Phone Number | 750-8300 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
No Trading Symbol Flag | true | |
Entity Central Index Key | 0001957845 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class R-U Shares | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 7,300,842 | |
Class R-I Shares | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 723,000 | |
Class E | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 4,314,539 | |
Class G Shares | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 40 | |
Class H | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 40 |
Statements of Assets and Liabil
Statements of Assets and Liabilities - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 1,000 | $ 1,000 |
Deferred offering costs | 1,347,974 | 157,568 |
Other assets | 450,510 | 0 |
Total assets | 9,162,084 | 3,793,188 |
Liabilities | ||
Organization costs payable | 7,013,438 | 3,634,620 |
Offering costs payable | 1,346,716 | 157,568 |
Other accrued expenses and liabilities | 472,455 | 0 |
Total liabilities | 9,161,084 | 3,792,188 |
Commitments and contingencies (Note 4) | ||
Net assets | $ 1,000 | $ 1,000 |
Shares outstanding | 40 | 40 |
Net asset value per share (in dollars per share) | $ 25 | $ 25 |
Manager | ||
Assets | ||
Due from Manager | $ 7,362,600 | $ 3,634,620 |
Liabilities | ||
Due to Manager | $ 328,475 | $ 0 |
Statements of Assets and Liab_2
Statements of Assets and Liabilities (Parenthetical) - Class G Shares - shares | Jun. 30, 2023 | Dec. 31, 2022 |
Shares authorized (in shares) | 40 | 40 |
Shares issued (in shares) | 40 | 40 |
Shares outstanding (in shares) | 40 | 40 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Operating expenses | ||
Organization costs | $ 1,915,826 | $ 3,706,035 |
General and administrative | 21,945 | 21,945 |
Total operating expenses | 1,937,771 | 3,727,980 |
Less: Operating expenses reimbursed by Manager | (1,937,771) | (3,727,980) |
Net operating expenses | 0 | 0 |
Net investment income | $ 0 | $ 0 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization KKR Private Equity Conglomerate LLC (“K-PEC” and the “Company”) was formed on December 6, 2022 as a limited liability company under the laws of the state of Delaware and the Company operates its business in a manner permitting it to be excluded from the definition of an “investment company” under the Investment Company Act of 1940, as amended. The Company is a holding company that seeks to acquire, own and control portfolio companies with the objective of generating attractive risk-adjusted returns and achieving medium-to-long-term capital appreciation through joint ventures. The Company expects that its portfolio companies will operate principally in the following business lines: Business & Financial Services; Consumer & Retail; Healthcare; Impact; Industrials; and Technology, Media & Telecommunications. K-PEC plans to conduct a continuous private offering of its shares in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), to (i) accredited investors (as defined in Regulation D under the Securities Act) and (ii) in the case of shares sold outside of the United States, to persons that are not “U.S. persons” (as defined in Regulation S under the Securities Act). The Company is sponsored by Kohlberg Kravis Roberts & Co. L.P. (together with its subsidiaries, “KKR”) and expects to benefit from KKR’s institutional private equity platform pursuant to a management agreement to be entered into with KKR DAV Manager LLC (the “Manager”) to support the Company in managing its portfolio companies with the objective of generating attractive risk-adjusted returns and achieving medium-to-long-term capital appreciation through joint ventures diversified by sector, industry and geography for shareholders. The Company has no activity as of June 30, 2023 other than matters relating to its organization and offering. As of June 30, 2023 and December 31, 2022, the only capital contribution to the Company resulted in the issuance of Class G Shares of the Company at an aggregate purchase price of $1,000 to KKR Group Assets Holdings III L.P., an affiliate of the Manager. As of June 30, 2023 and December 31, 2022, the Company had neither purchased nor contracted to purchase any investments. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are stated in United States (“U.S.”) dollars. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these financial statements. Actual results could differ from those estimates. A statement of changes in net assets, statement of cash flows and financial highlights have not been presented because the Company has not commenced operations. The Company’s financial statements are prepared using the accounting and reporting guidance under Accounting Standards Codification 946, Financial Services—Investment Companies (“ASC 946”). Cash and Cash Equivalents Cash and cash equivalents consists solely of money market funds with financial institutions with maturities of three or fewer months at the time of acquisition. As of June 30, 2023 and December 31, 2022, the Company was invested in the JPMorgan U.S. Government Money Market Fund. Organization and Offering Costs Organization costs are expensed as incurred. Organization costs consist of costs incurred to establish the Company and enable it legally to do business. For the three and six months ended June 30, 2023, the Company incurred organization costs of $1,915,826 and $3,706,035, respectively. Offering costs include registration fees and legal fees regarding the preparation of the initial registration statement. Offering costs are accounted for as deferred costs until operations begin. For continuous offerings, offering costs are then amortized over the first twelve months of operations on a straight-line basis. For the six months ended June 30, 2023 and for the period from December 6, 2022 (date of formation) to December 31, 2022, the total amount of the offering costs incurred by the Company was $1,347,974 and $157,568, respectively. Valuation of Investments at Fair Value ASC 820, Fair Value Measurement , defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value. The Company recognizes and accounts for its investments at fair value. The fair value of the investments does not reflect transaction costs that may be incurred upon disposition of investments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value on the Statement of Assets and Liabilities are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined under GAAP, are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows: Level I — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level II — Inputs other than quoted prices included in Level I that are observable for the asset or liability, either directly or indirectly. Level II inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level III — Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and an adjustment to the transactions or quoted prices may be necessary to estimate fair value. See “Part II, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates–Valuation of Infrastructure Assets” in this Quarterly Report on Form 10-Q. Income Taxes The Company operates so that it will qualify to be treated as a partnership for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, and not as a publicly traded partnership taxable as a corporation. As such, it will not be subject to any U.S. federal and state income taxes. In any year, it is possible that the Company will be considered a publicly traded partnership and will not meet the qualifying income exception, which would result in the Company being treated as a publicly traded partnership taxed as a corporation, rather than a partnership. In such case, the members would then be treated as shareholders in a corporation, and the Company would become taxable as a corporation for U.S. federal, state and/or local income tax purposes. The Company would be required to pay income tax at corporate rates on its net taxable income. In addition, the Company operates, in part, through subsidiaries that may be treated as corporations for U.S. and non-U.S. tax purposes and therefore may be subject to current and deferred U.S. federal, state and/or local income taxes at the subsidiary level. Calculation of Net Asset Value |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Initial Capital Contribution On December 6, 2022, KKR made an initial capital contribution that resulted in the issuance of 40 Class G Shares of the Company at an aggregate purchase price of $1,000 to KKR Group Asset Holdings III L.P., an indirect subsidiary of KKR. Management Agreement On July 27, 2023, the Company entered into a management agreement with the Manager (“Management Agreement”). Pursuant to the Management Agreement, the Manager is responsible for sourcing, evaluating and monitoring the Company’s acquisition opportunities and making recommendations to the Company’s executive committee related to the acquisition, management, financing and disposition of the Company’s assets, in accordance with the Company’s acquisition objectives, guidelines, policies and limitations, subject to oversight by the Company’s Board of Directors (the “Board”). Expense Limitation and Reimbursement Agreement The Company has entered into an Expense Limitation and Reimbursement Agreement (the “Expense Limitation Agreement”) with the Manager pursuant to which the Manager has agreed to forego an amount of its monthly management fee and/or pay, absorb or reimburse certain expenses of the Company to the extent necessary so that, for any year, the Company’s annualized Specified Expenses (as defined below) do not exceed 0.60% of the Company’s net assets as of the end of each calendar month. The Company has agreed to carry forward the amount of any foregone management fee and/or expenses paid, absorbed or reimbursed by the Manager, when and if requested by the Manager, within three years from the end of the month in which the Manager waived or reimbursed such fees or expenses, but only if and to the extent that Specified Expenses plus any recoupment do not exceed 0.60% of the Company’s net assets at the end of each calendar month. The Manager may recapture a Specified Expense in the same year it is incurred. This arrangement cannot be terminated prior to June 30, 2024 without the Board’s consent. “Specified Expenses” is defined to include all expenses incurred in the business of the Company, including organizational and offering costs, with the exception of (i) the management fee, (ii) the performance participation allocation, (iii) the servicing fee, (iv) the distribution fee, (v) portfolio company level expenses, (vi) brokerage costs or other acquisition-related out-of-pocket expenses, including with respect to unconsummated transactions, (vii) dividend/interest payments (including any dividend payments, interest expenses, commitment fees, or other expenses related to any leverage incurred by the Company), (viii) taxes, (ix) ordinary corporate operating expenses (including costs and expenses related to hiring, retaining, and compensating employees and officers of the Company), (x) certain insurance costs and (xi) extraordinary expenses (as determined in the sole discretion of the Manager). The Expense Limitation Agreement will be in effect through and including June 30, 2024, but may be renewed by the mutual agreement of the Manager and the Company for successive terms. Under the Expense Limitation Agreement, the Company has agreed to carry forward the amount of the foregone management fees and/or expenses paid, absorbed or reimbursed by the Manager for a period not to exceed three years from the end of the month in which the Manager waived or reimbursed such fees or expenses. As of June 30, 2023, the Manager agreed to reimburse expenses of $1,937,771 and $3,727,980 incurred by the Company for the three and six months ended June 30, 2023, pursuant to the Expense Limitation Agreement. The amounts are subject to recoupment within a three year period. As of June 30, 2023, the Company recorded $7,362,600 as Due from Manager related to amounts waived under the Expense Limitation Agreement to date and $328,475 as Due to Manager related to amounts paid by the Manager on behalf of the Company. As of June 30, 2023 and December 31, 2022, management believes that it is not probable for the Company to be required to reimburse the expenses waived by the Manager. |
Commitment and Contingencies
Commitment and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company was not subject to any material litigation nor was the Company aware of any material litigation threatened against it. Indemnification Under the Company’s amended and restated limited liability company agreement (the “LLC Agreement”) and organizational documents, the members of the Board, the Manager, KKR, and their respective affiliates, directors, officers, representatives, agents and employees are indemnified against certain liabilities arising out of the performance of their duties to the Company. In the normal course of business, the Company enters into contracts that contain a variety of representations and that provide general indemnifications. The Company’s maximum liability exposure under these arrangements is unknown, as future claims that have not yet occurred may be made against the Company. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Class H Shares Issuance On July 27, 2023, the Company issued to K-PRIME GP LLC a total of 40 Class H Shares of the Company at $25.00 per Class H Share for aggregate consideration of $1,000. For as long as the Management Agreement has not been terminated, the Class H Members (as defined in the Company’s LLC Agreement) may receive a Performance Participation Allocation from the Company. Unregistered Sale of Equity Securities As of August 1, 2023, the Company issued and sold the following Investor Shares (the “Investor Shares”) of the Company to third party investors for cash: Class Number of Shares Sold (1) Consideration (1) Class R-I Shares 723,000 $ 18,075,000 Class R-U Shares 7,300,842 $ 182,521,050 (1) Share and dollar amounts are rounded to the nearest whole number. Investments On August 1, 2023, the Company issued to KKR Alternative Assets LLC (an indirect subsidiary of KKR & Co. Inc.) 4,314,539 Class E Shares of the Company at $25.00 per Class E Share in exchange for the contribution to the Company of ownership interests in (i) Groundworks, LLC, a residential foundation repair and water management service company, (ii) Accuris (f/k/a S&P Engineering Solutions), formerly a division of S&P Global Inc., dedicated to providing search and workflow tools for the global engineering community, (iii) April SAS, a wholesale insurance broker, (iv) CoolIT Systems Inc., a provider of direct-to-chip liquid cooling for commercial datacenters and consumer desktop computers, and (v) Industrial Physics, Inc., a manufacturer of testing and measurement instruments and associated aftermarket parts and services. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are stated in United States (“U.S.”) dollars. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in these financial statements. Actual results could differ from those estimates. A statement of changes in net assets, statement of cash flows and financial highlights have not been presented because the Company has not commenced operations. The Company’s financial statements are prepared using the accounting and reporting guidance under Accounting Standards Codification 946, Financial Services—Investment Companies (“ASC 946”). |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consists solely of money market funds with financial institutions with maturities of three or fewer months at the time of acquisition. As of June 30, 2023 and December 31, 2022, the Company was invested in the JPMorgan U.S. Government Money Market Fund. |
Organization Costs | Organization costs are expensed as incurred. Organization costs consist of costs incurred to establish the Company and enable it legally to do business. F |
Offering Costs | Offering costs include registration fees and legal fees regarding the preparation of the initial registration statement. Offering costs are accounted for as deferred costs until operations begin. For continuous offerings, offering costs are then amortized over the first twelve months of operations on a straight-line basis. |
Valuation of Investments at Fair Value | Valuation of Investments at Fair Value ASC 820, Fair Value Measurement , defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value. The Company recognizes and accounts for its investments at fair value. The fair value of the investments does not reflect transaction costs that may be incurred upon disposition of investments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities recorded at fair value on the Statement of Assets and Liabilities are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined under GAAP, are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, and are as follows: Level I — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level II — Inputs other than quoted prices included in Level I that are observable for the asset or liability, either directly or indirectly. Level II inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level III — Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and an adjustment to the transactions or quoted prices may be necessary to estimate fair value. See “Part II, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates–Valuation of Infrastructure Assets” in this Quarterly Report on Form 10-Q. |
Income Taxes | Income Taxes The Company operates so that it will qualify to be treated as a partnership for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, and not as a publicly traded partnership taxable as a corporation. As such, it will not be subject to any U.S. federal and state income taxes. In any year, it is possible that the Company will be considered a publicly traded partnership and will not meet the qualifying income exception, which would result in the Company being treated as a publicly traded partnership taxed as a corporation, rather than a partnership. In such case, the members would then be treated as shareholders in a corporation, and the Company would become taxable as a corporation for U.S. federal, state and/or local income tax purposes. The Company would be required to pay income tax at corporate rates on its net taxable income. In addition, the Company operates, in part, through subsidiaries that may be treated as corporations for U.S. and non-U.S. tax purposes and therefore may be subject to current and deferred U.S. federal, state and/or local income taxes at the subsidiary level. |
Calculation of Net Asset Value | Calculation of Net Asset Value |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Schedule of Issued and Sold Investor Shares | As of August 1, 2023, the Company issued and sold the following Investor Shares (the “Investor Shares”) of the Company to third party investors for cash: Class Number of Shares Sold (1) Consideration (1) Class R-I Shares 723,000 $ 18,075,000 Class R-U Shares 7,300,842 $ 182,521,050 (1) Share and dollar amounts are rounded to the nearest whole number. |
Organization (Details)
Organization (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Dec. 31, 2022 | Jun. 30, 2023 | |
Class G Shares | ||
Class of Stock [Line Items] | ||
Aggregate purchase price | $ 1,000 | $ 1,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Dec. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2023 | |
Accounting Policies [Abstract] | |||
Organization costs | $ 1,915,826 | $ 3,706,035 | |
Offering expenses | $ 157,568 | $ 1,347,974 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 06, 2022 | Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Schedule of Related Party Transactions, by Related Party [Line Items] | ||||
Reimbursed expenses | $ 1,937,771 | $ 3,727,980 | ||
Manager | ||||
Schedule of Related Party Transactions, by Related Party [Line Items] | ||||
Agreement term | 3 years | |||
Reimbursed expenses | 1,937,771 | $ 3,727,980 | ||
Due from Manager | 7,362,600 | 7,362,600 | $ 3,634,620 | |
Due to Manager | $ 328,475 | $ 328,475 | $ 0 | |
Manager | Maximum | ||||
Schedule of Related Party Transactions, by Related Party [Line Items] | ||||
Expense rate (percent) | 0.60% | |||
Manager | KKR Group Asset Holdings III L.P. | ||||
Schedule of Related Party Transactions, by Related Party [Line Items] | ||||
Number of shares issued | 40 | |||
Aggregate purchase price | $ 1,000 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - Subsequent Event - USD ($) | Aug. 01, 2023 | Jul. 27, 2023 |
Class H | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 40 | |
Sales price per share (in usd per share) | $ 25 | |
Aggregate purchase price | $ 1,000 | |
Class E | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 4,314,539 | |
Sales price per share (in usd per share) | $ 25 |
Subsequent Events - Sold and Is
Subsequent Events - Sold and Issued Investor Shares (Details) - Subsequent Event | Aug. 01, 2023 USD ($) shares |
Class R-I Shares | |
Subsequent Event [Line Items] | |
Number of Shares Sold | shares | 723,000 |
Consideration | $ | $ 18,075,000 |
Class R-U Shares | |
Subsequent Event [Line Items] | |
Number of Shares Sold | shares | 7,300,842 |
Consideration | $ | $ 182,521,050 |