Fireside Chat, Interview, Conference Presentation
Joe Bae, Co-CEO of KKR and Founder of The Asian American Foundation
- KKR anticipates continuing to prioritize themes including digital infrastructure, digitization, software, ESG/decarbonization, life sciences, and multifamily housing driven by supply shortages in the U.S. and Europe.
- The firm expects to avoid industries lacking pricing power due to predicted margin and multiple contraction, while actively maintaining investment pace in sustainable sectors like solar and wind to support the net zero transition.
- Natural gas investment is viewed as necessary for an orderly energy transition, even if renewable adoption accelerates, with the Russia-Ukraine conflict expected to drive significant energy security investment in Europe over the next three to five years.
- KKR forecasts that Europe faces higher recessionary risks than the U.S. due to energy pressures, noting that Federal interest rate hike pace will be a decisive factor in whether a recession occurs next year or the year after.
- Supply chain resiliency is identified as a critical boardroom focus to reduce overexposure to China by identifying bottlenecks and shifting capacity to friendly allied countries rather than returning entirely to onshore U.S. production.
- Geopolitical complexity regarding China is expected to complicate investment decisions there, despite its status as the future largest economy with a massive emerging middle class, while the U.S. and North America are expected to maintain privileged energy independence.
- KKR plans to continue active fundraising in Asia, currently one of the firm's largest markets, leveraging the 820 million millennials in the Asia-Pacific region compared to 68 million in the U.S. to drive growth in services, leisure, and healthcare.
- The firm intends to sustain hiring of millennial and Gen Z employees, who currently make up over 70% of the workforce, to align with innovation and consumer behavior strategies and capitalize on expected wealth transfers.
- KKR expects its culture to foster entrepreneurship and collaborative risk-taking, including a plan where learning from mistakes and bad deals becomes standard, while maintaining active investor status to remain nimble during market dislocations.
- Significant ESG integration is expected across employees, LPs, and portfolio companies, with the firm leveraging concentrated control stakes in private equity to drive higher margins and profitability through responsible ownership.
- The TAF initiative is characterized as a multi-decade effort to build infrastructure for the Asian American community to organize nationally and challenge the "model minority myth," supported by the introduction of Asian American studies in public schools and new tenured faculty at Harvard.
- KKR anticipates a massive shift in corporate strategy toward Asian American communities and warns that failure to improve law enforcement engagement could lead to attacks on Asian Americans in New York City growing by over 360 percent, mirroring 2021 trends.