Stone Point, KKR Form KKR – SPC Merchant Advisors
Stone Point Capital, through its Trident V private equity fund, and KKR & Co. L.P. announced the formation of a partnership to establish a new company, KKR – SPC Merchant Advisors LLC (Merchant Advisors). The newly formed company will provide principal and agency-based capital markets services to mid-market and sponsor-backed companies as well as make certain principal investments to support client needs. This new business will be distinct and separate from KKR’s existing capital markets business (KKR Capital Markets and, together with its affiliates, KKR), which primarily serves KKR’s private equity portfolio companies.
Trident V and KKR will each commit $150 million of equity, or $300 million in total, to Merchant Advisors to support its capital markets activities and client base. Merchant Advisors will be overseen by a board of directors consisting of equal representation from KKR and Stone Point. The day-to-day origination, execution and underwriting activities of the company will initially be managed by KKR Capital Markets executives. Over time, Merchant Advisors may expand its business to include other services that are valued by its clients, including risk management and fundraising services.
“The financial services industry is going through unprecedented change that is creating challenges for companies to conduct business. We see an opportunity for an independent capital markets business that is willing to take on principal risk and allow its clients to pursue their growth and business development initiatives,” said Chuck Davis, co-founder of Stone Point. “We are partnering with KKR on this opportunity because we have known and worked with Craig Farr and many of the people on his team for several years and have great confidence in their abilities. The firm has clearly demonstrated the value of a dedicated capital markets unit that works for its portfolio companies and it has assembled an experienced team that can support our efforts to provide similar services and expertise to other mid-sized companies,” Davis said.
“Stone Point is a leading investor in the financial services sector with a strong track record of backing new and innovative platforms, and KKR is excited to partner with the team. Together with Stone Point, we believe Merchant Advisors will be well positioned to deliver a critical capital markets service to underserved corporate and sponsor clients, particularly as the structure of the financial industry is getting reshaped,” Craig Farr, Member of KKR and global head of Capital Markets, said.
Henry Kravis and George Roberts, co-chairmen and co-CEOs of KKR added, “We have known and respected Steve Friedman and Chuck Davis from Stone Point for many years and are excited to work with them in this new partnership. Middle-market companies and financial sponsors need access to more services and capital and we believe KKR – SPC Merchant Advisors will be well positioned to provide both.”