KKR Global Private Equity Overview

Michael W. Michelson
Joseph Y. Bae
Johannes P. Huth
July 16, 2012

CONFIDENTIAL AND PROPRIETARY

For Investment Professionals Only

North American Private Equity

Michael W. Michelson

KKRs Private Equity Team in North America

Deep bench of 92 experienced investment and operations professionals

More than three decades of experience investing in North America
Extensive additional resources through KKR Capital Markets, Senior
Advisors, Public Affairs & Communications, the Client & Partner Group and
Global Macro and Asset Allocation

Note:

The figure cited above includes KKR Capstone and other individuals that also may provide services to other investment teams across KKR including in our international offices. KKR Capstone is owned and controlled by its senior management
and not KKR.

North America PE Investment Team

Our investment team is led by 19 private equity members who have an
average of 17 years of tenure with KKR and 24 years of industry
experience
19 Members who have been at KKR for nearly 17 years on average
3 Managing Directors who have 27 years of industry experience on average
4 Directors who have 11 years of industry experience on average
An additional 12 Principals and 27 Associates

North America PE Investment Team

Focus on 8 industries
Facilitates in-depth industry knowledge and a network of industry experts
Enables us to create proprietary investment opportunities
Industry Team Leadership
Consumer
Products

Energy, Infrastructure &

Natural Resources

Simon Brown,
Member

Marc
Lipschultz,
Member

Jonathan
Smidt,
Member

Raj Agrawal,
Member

Financial Services

Sir Deryck
Maughan,
Member

Healthcare

Tagar Olson, Mike Michelson,

Jim
Member
Member, Co-Head Momtazee,
NA Private Equity
Member

Industrials

Media &
Communications

Tom Uger,
Jamie Greene, Pete Stavros,
Alex Navab,
Member
Member
Member, Co-Head Member
NA Private Equity

Retail

Mike Calbert,
Member

Technology

Adam
Clammer,
Member

David Kerko,
Member

Herald
Chen,
Member

Industry Team Members

Max Alper
Lilah Hume
Anthony Lee
Elissa
Leechawengwongs
Samson
Mesghena
Sunny Patel
Sagar Sanghvi

John Bookout
Claire Farley
David Rockecharlie
Robert Antablin
Brandon Freiman
Ravi Gupta
Dash Lane
Frank Spelman
Ash Upadhyaya
Lilah Hume
Amanda Lee
Brian Niemczak
Preston Powell
Zohair Rashid
Alex Shih
Brian Telesmanich

Chris Harrington
Brian Hinkes
Vittal Kadapakkam
Amanda Lee
Anthony Lee
Zohair Rashid

Ali Satvat
Max Lin
Justin Sabet-Peyman
Scott Arnold
Felix Gernburd
Yasser Ghanchi
Zach Greenberg
Vishal Patel
Mahdi Yousif

Josh Weisenbeck
Brandon Brahm
Emily Goergen
Brian Hinkes
Alex Shih

Herald Chen
Webster Chua
Brandon Brahm
Samson Mesghena
Sunny Patel
Peter Sundheim

Nate Taylor
Adam Waglay
Scott Arnold
Felix Gernburd
Yasser Ghanchi
Eli Horton
Vishal Patel
Brandon Van
Buren

Brittany Bagley
Kenan Basha
Prabh Chandhoke
Zach Greenberg
Eli Horton
Brandon Van Buren
Harish Venkatesh
Mahdi Yousif
Marius Haas

KKRs Private Equity Team in North America

KKR Capstone

Dean Nelson,
Member & Head
of KKR Capstone

(as of July 2012)

AJ Brohinsky

Todd Cooper

Sarah Dickens Chad Fargason

Adam Fless

Chris Hsu

Craig Kessler

Thomas Kim

Matt King

Vini Letteri

Andrew
Low Ah Kee

Kyle Matter

Karr Narula

Paolo
Notarnicola

Brian O'Neill

Ivo
Parashkevov

Rushi Patel

Derick Prelle

Steven
Schepps

Matthew
Skaruppa

Jon Winny

Charlie Young

Michael Linford Jeff Livingston

Scott Wagner,
Member

9 senior operating professionals who have been at KKR Capstone for more than 7 years on
average

Collectively, these executives have 165+ years of industry experience

An additional 11 Principals and 7 Associates complete the team
Note:

KKR Capstone is owned and controlled by its senior management and not KKR. The individuals above also may provide services to other investment teams across KKR including in our international offices.

KKRs Private Equity Team in North America (continued)

KKR Capital Markets

Craig Farr,
Member & Head
of KKR Capital
Markets

(as of July 2012)

Akhil Bansal

Mark Basile

Douglas Brody

Richard Chand

James Connolly

Corey Flood

Peter Glaser

Gregory Guest

Philip Kim

Matthew Kretzman

Edward Law

Joshua Lederman

George Mueller

Jeffrey Rowbottom

Chris Rulon-Miller

Neil Shah

Paul Sigfusson

Adam Smith

Cade Thompson

31 executives worldwide, including 20 in North America

Collectively, these executives have 200+ years of experience
Execution Success Across the Capital Structure
PE Syndication

Note:

Acquisition
Financing

Debt Underwriting

IPOs

Follow-Ons

KKR Capital Markets is a broker-dealer registered with the U.S. Securities and Exchange Commission, a member of FINRA and a member of SIPC. The individuals above also may provide services to other investment teams across KKR including in our international offices. The portfolio companies
identified above represent the four most recent North America private equity investments where KKR Capital Markets was engaged in each transaction type. At the time of investment, and currently from a KKR monitoring standpoint, Avago has been classified as a North American investment based on
a specific criteria met. However, given Avago has significant operations in Asia, Avago is also included in the Asian portfolio slides. The specific portfolio companies identified are not representative of all of the portfolio companies purchased, sold or recommended for KKR Funds, and it should not be
assumed that the investments identified were or will be profitable.

KKRs Private Equity Team in North America (continued)

Senior Advisors

Note:

Michael D. Capellas

Former CEO of First Data Corporation, Compaq Computer and WorldCom

David Cote

Chairman and CEO of Honeywell

Lewis M. Eisenberg

Former Chairman Port Authority of New York and New Jersey and former General Partner and
Co-Head of Equity Division at Goldman Sachs & Company

George M.C. Fisher

Former Chairman and CEO of Motorola, Inc. and Eastman Kodak Company

Joe W. Forehand

Former Chairman and CEO of Accenture

Kenneth W. Freeman

Allen Questrom Professor and Dean of the School of Management at Boston University and
former Chairman and CEO of Quest Diagnostics Incorporated

R. Clint Johnstone

Former Director and CFO of the Bechtel Group

John Mack

Former CEO and former Chairman of the Board of Morgan Stanley

Paul J. Norris

Former Chairman and CEO of W.R. Grace & Co.

James W. Owens

Caterpillar Chairman and CEO Emeritus

Lee Raymond

Former Chairman and CEO of Exxon Mobil

Arun Sarin

Former CEO of Vodaphone Group Plc.

Richard Sarnoff

Former Co-Chairman of Bertelsmann, Inc. and Supervisory Board Member of Bertelsmann AG

The individuals above also may provide services to other investment teams across KKR including in our international offices.

KKRs Private Equity Team in North America (continued)

Public Affairs and Communications

Ken Mehlman,
Member & Head
of Public Affairs

Note:

Travers Garvin
Jennifer Hanley
Kristi Huller
Elizabeth Seeger
Bryan Bridges
Jenny Farrelly
Jill Henderlight
Alexandra Hartman

The individuals above also may provide services to other investment teams across KKR including in our international offices.

KKRs Private Equity Team in North America (continued)

Global Macro and Asset Allocation
Frances Lim
David McNellis

Henry McVey,
Managing
Director & Head
of Global Macro
and Asset
Allocation

Note:

The individuals above also may provide services to other investment teams across KKR including in our international offices.

KKRs Private Equity Team in North America (continued)

Private Equity & Related Executives(1)

3.9 Executives per
Company
3.7 Executives per
Company
2.2 Executives per
Company

34 Portfolio
Companies*

26 Portfolio
Companies

25 Portfolio
Companies

134
97

56

2005
(1)
(2)
*

2007

Today

(2)

Related Executives including KKR Capstone, KKR Capital Markets, a broker-dealer registered with the U.S. Securities and Exchange Commission, a member of FINRA and a member of SIPC, North American Senior Advisors, Global Macro and
Asset Allocation, and Public Affairs & Communications. These individuals also may provide services to other investment teams across KKR including in our international offices.
As of June 2012.
Includes Aricent and Avago. At the time of investment and currently from a KKR monitoring standpoint, Aricent and Avago are classified as North American investments based on specific criteria; given the companies however have significant
operations in Asia, we also include the companies in our Asian private equity portfolio.

10

KKRs Private Equity Team in North America (continued)

Client & Partner Group

Suzanne
Donohoe,
Member & Head
of Client &
Partner Group

(as of July 2012)

Ari Barkan

Jacqueline Barrett

Conway Bate

James Burns

Ryan Carlson

Janice Cook
Roberts

Monica Davis

Kate De Mul

Ralph
DeBernardo

Christina Fang

Nicole Fay

Saleena Goel

Annette
Guarnaccio

Henry Hager

Beth Hammond

Tony Hass

Katie Hotze

JB Kiley

Amy Lesch

John Massad

Daniel McLaughlin

Rick Moreno

John Morrison

Sean Nelson

Lesley Nurse

Zachary Pack

Daniel Parant

Jessica Polkow

Jeffrey Schachter

Jessica Siebel

Amy Stuart

Wilson Tong

Mariko Uyeda

Lynette
Vanderwarker

Alisa Wood

Tiffany Yu
Note:

The individuals above also may provide services to other investment teams across KKR including in our international offices.

11

KKRs Integrated Value Creation

Industry Expertise

Portfolio Management

Extensive understanding

Oversight and monitoring

Experienced Senior Advisors

Strong networks

Public Affairs
Active management of
responsibilities to stakeholders

Senior Advisors
Network of senior executives
that work with KKR and KKR
portfolio companies

Global
Resources
Drive
Value

KKR Capstone
100-Day Plans
Active value creation

KKR Capital Markets

Acquisition financing and
syndication assistance
Exit and strategic refinancing
plans
12

KKR North American Portfolio Summary

Portfolio is made up of high quality assets with world-class management teams, strong
competitive positions, and attractive capital structures
North America portfolio performed well overall and is carrying momentum into 2012
We remain very active in de-risking the portfolio; ~70% of the portfolio debt matures in 2016
and thereafter
Returned $7.4bn in last 18 months across the North American Funds with approximately
$3.8bn returned in 2011 and a further $3.6bn distributed 2012 YTD
Since December 31, 2010, the remaining value of the three most recent North American
funds (1996, Millennium & 2006) increased by $2.6bn or 11.0%(1)
Millennium Fund marked at 2.03x on 3/31/12
2006 Fund marked at 1.31x on 3/31/12

Note:
(1)

Past performance is no guarantee of future results. See Important Information about the calculation of returns.
Includes investments made during the period.

13

Current North American Private Equity Portfolio(1)

Strong portfolio of world-class franchises
Over $130 billion of annual revenues and over $27 billion of annual EBITDA
Employing over 465,000 people
Well diversified by industry

Note:
(1)

The specific companies identified are not representative of all of the companies in KKRs current or historical North American private equity portfolio, and it should not be assumed that an investment in the companies identified was or will be profitable. At the time of investment and currently
from a KKR monitoring standpoint, Aricent and Avago are classified as North American investments based on specific criteria; given the companies, however, have significant operations in Asia, we also include the companies in our Asian private equity portfolio.
As of June 2012. Reflects e2020 and Learning House, two investments of the Weld North platform. In May 2012, KKR announced its exit of the investment in Legg Mason. In June 2012, KKR closed its sale of the investment in El Paso Midstream.

14

Industry Diversification by Total Deal Value as of 3/31/2012

Millennium Fund

2006 Fund

Recycling
1.7%

Media
22.0%

Transportation
0.2%
Telecom
0.2%

Retail
8.3%
Manufacturing
7.8%
Technology
12.7%
Hotels/Leisure
3.6%

Education
4.0%

Energy
13.8%

Technology
4.5%

Financial
Services
15.9%

Telecom
1.2%

Chemicals
3.0%

Health Care
18.5%
Energy
16.3%

Note:

Consumer
Products
2.9%

Consumer
Products
4.9%

Retail
31.3%
Health Care
18.5%
Media
3.9%

Manufacturing
4.8%

Pie chart above represents total value (i.e. realized value + unrealized value) of the Millennium Fund by industry.

15

KKR North American Funds Performance

North American Composite Private Equity Returns from Inception to March 31, 2012:
35.0%
30.0%
25.0%
20.0%
15.0%

10.0%

KKR PE C omposite
Gross IRR
25.9%

KKR PE Composite
Outperformance
(On Net Return)

KKR PE C omposite
Net IRR
19.4%

S&P 500
12.1%

Russell 3000
11.7%
S&P 500
7.3%

Russell 3000
7.7%

5.0%

0.0%

Note:

Past performance is no guarantee of future results. See Important Information about the calculation of IRRs and MOIC and the use of market indices as benchmarks. KKRs North American private equity funds include: KKR 1976, 1980, 1982,
1984, 1986, 1987, 1993, 1996, Millennium and 2006. Vintage years for these funds are 1977, 1980, 1983, 1984, 1986, 1987, 1993, 1997, 2002 and 2006, respectively.

16

KKR North America Private Equity Deal Flow

We have been very active looking at investments over the past 15 months
~920: North American private equity
opportunities that KKR deal teams spent
significant time evaluating since 1/1/11
~110: Discrete new
private equity
opportunities discussed
with the Investment
Committee(1)
10: Investments
Committed
or Closed(2)

Note:
(1)
(2)

Data represents North America based private equity deal flow for the period 1/1/11 to 3/31/12; includes a small number of opportunities related to existing KKR portfolio companies.
Most investments are presented to the Investment Committee numerous times throughout the diligence process, however this count includes each unique investment opportunity once and does not include subsequent presentations.
Includes transactions/commitments closed or announced for the period 1/1/11 to 3/31/12 (Weld North, Del Monte, Accelerated Oil Technologies, Capsugel, Ipreo, Academy Sports + Outdoors, Go Daddy, Santander Consumer USA, Samson
Resources and Capital Safety).

17

Differentiated Sourcing of Transaction Activity 20112012 YTD

# of Recent Transactions by Source

Auction
22%

Proprietary
22%

Limited Process
56%

Note:

Data represents North America based private equity investments/commitments announced and/or completed for the period 1/1/11 to 3/31/12 (Accelerated Oil Technologies, Weld North, Capsugel, Academy Sports + Outdoors, Ipreo, Go
Daddy, Samson Resources, Santander Consumer USA and Capital Safety). Del Monte, which closed in February 2011, is a KKR-identified opportunity and is not included above.

18

We Have Led Transactions with EV of $23.9bn and Have Committed

$3.4bn in Total New Equity
North American funds private equity commitments in 2011 / 2012 YTD

2012

2011

Investment(1)

Note:
(1)
(2)

KKR Fund Equity

Invested

Type of Deal

EV/EBITDA
Multiple at
Acquisition

Leverage
Multiple at
Acquisition

$81mm

Limited Process
Partnership

N/A

N/A

$536mm

LBO

8.6x

6.1x

$467mm

Auction LBO

11.3x

6.3x

$194mm

Auction LBO

12.0x

6.3x

$437mm

Limited Process
LBO

10.8x

6.2x

$282mm

Limited Process LBO

11.1x

6.1x

$100mm(2)

Proprietary Build-Up

N/M

N/M

$209mm

Proprietary
Minority Investment

5.2x

N/M

$751mm

Limited Process LBO

7.9x

3.6x

$362mm

Limited Process LBO

11.1x

5.7x

All information as of March 31, 2012, unless otherwise noted. Past performance is no guarantee of future results.
The specific companies identified are not representative of all of the companies in KKRs current or historical North American private equity portfolio, and it should not be assumed that an investment in the identified companies was or will be
profitable. The identified companies are those that are currently owned by a KKR-sponsored North America focused private equity fund and monitored by KKR private equity professionals located in North America.
Represents two investments, e2020 and Learning House, made by the previously announced formation of Weld North Holdings, LLC, a platform created in 2009 to acquire, invest in and operate a variety of businesses in the consumer services,
education, media, personal services and marketing sectors. KKR has committed to invest up to $315 million.

19

Investing Behind Ongoing Themes

High-quality, industry-leading
franchises with operational
value creation opportunities
Global presence with significant
exposure to developing world
economies
Ongoing pursuit of energy
themes
Partnering with world class,
entrepreneurs and providing
growth capital
Utilizing flexible, non-traditional
investment structures
(JV / Partnerships)
Note:

The portfolio companies identified above represent North America private equity investments made since January 1, 2011. The specific portfolio companies identified are not representative of all of the portfolio companies purchased, sold or recommended for KKR Funds, and it should not be assumed
that the investments identified were or will be profitable.

20

Summary Contribution / Distribution Analysis

2011-2012 YTD, KKR North American funds have distributed or announced distributions of
approximately $4.0bn in excess of capital contributed
Contributions

Distributions

($mm)

($mm)

Academy Sports
AOT
Capsugel
Del Monte Foods
Go Daddy
Ipreo Holdings LLC
MMI Holdings
Samson Resources
Santander Consumer
U.N Ro-Ro
Weld North
Yageo Corporation

2011
$437.4
80.9
467.3
535.7
281.8
194.1
4.4
750.6
209.3
2.3
99.9
1.5
$3,065.2

AOT
Capital Safety

$3,472.8mm

2012 YTD
$45.5
362.1
$407.6

Avago
BW Holdings
Dollar General
DSD
HCA
Hilcorp Resources
Hotel del Coronado
Legrand
Maxeda
Modern Dairy
NXP
Primedia
Rockwood Holdings
Seven Media Group
Tarkett
TDC A/S
Texas Crude
Tianrui
Zhone

2011
$237.6
$46.4
798.0
13.8
349.4
527.8
13.8
514.0
68.3
7.8
67.8
183.9
559.8
319.2
10.3
32.0
34.6
8.5
4.4
$3,797.4

Dollar General
DSD
HCA
Jazz
Legg Mason
Legrand
Nielsen
SCUSA
Tianrui
El Paso

Pending (Estimated)
Alliance Boots

2012 YTD
$1,129.3
5.6
137.5
147.6
665.2
111.9
132.7
24.4
3.4
186.9
$2,544.5

$1,094.9
$1,094.9
$3,639.4

$7,436.8mm
Note:

Data as of June 28, 2012. Excludes unfunded commitments to Weld North and Accelerated Oil Technologies. Alliance Boots distribution (announced June 2012) pending (estimate provided).

21

Extending Debt Maturities through Refinancings

~70% of debt now matures in or after 2016

In 2009, refinanced over $14bn
In 2010, refinanced over $28bn
In 2011, refinanced over $44bn
In 2012 YTD, refinanced over $11bn
North American Maturity Profile
at 12/31/2008 ($ in bn)

North American Maturity Profile

at 6/6/2012 Pro Forma ($ in bn)
$106.7

Reduced 2014 & 2015+ maturities by 70%

$52.3
$44.0
$28.4

$9.7

$11.4

$17.5

$11.8

$10.9

$10.2

2013

2014

$3.1

2009-10

2011

2012

2013

2014

2015+

2012

2015

2016+

22

Macro Orientation and Thematic Focus

Systematic Coordination with Global Macro Team
Combined with Broader NAPE Macro Themes

1) Digitalization

Focus / Importance of Value

2) Demographic Shifts

Health / Wellness

Big Data

Economic / Housing Recovery

Exposure to Emerging Markets

Resurgence of U.S. Manufacturing

3) Bimodal Consumption
4) Budget Austerity
5) Housing Market
6) Inflation
7) Scarce Resources

Pursued Alongside Industry-Specific Thematic Work

Note:

Unless indicated, the above reflects the current market views, opinions and expectations of KKR based on its historic experience. Historic market trends are not reliable indicators of actual future market behavior or future performance of any
particular investment or any KKR fund, vehicle or account which, may differ materially, and are not to be relied upon as such. There can be no assurance that investors in any KKR fund, vehicle or account will receive a return of capital.

23

Macro Themes Application to Industry Groups

Industry-specific themes developed against the overall NAPE macro themes
Scarce
Resources

Inflation

Housing
Market

Budget
Austerity

Bimodal
Consumption

Demographic
Shift

Digitalization

Consumer
Energy
Financial Services
Healthcare
Industrials

Media & Communications

Retail
Technology

24

Industry-Specific Investment Themes

Increased emphasis towards thematic-based investing

PE Industry Teams

Key Industry Themes

Consumer

Health & Wellness

Bimodal Consumption

Energy

Unconventionals

Global Comm. Demand New Supply Infrastructure

Financial Services

Differentiated Distribution

P&C Pricing Cycle

Underbanked Non-Prime

Healthcare

Insulated Sectors

Solving Cost Problems

Low Valuations

Industrials

Corp Carve-outs

Two Existing Platforms

Dist. in Upturn of Cycle

Media & Comm.

Digital Transition

Emerging Platforms

High ROI/Measurable

Retail

Value

Hispanization

eCommerce

Technology

Big Data

Cloud Computing

Mobility

Emerging Market Exposure

25

Summary Considerations by Industry

Industry

Near-Term
Outlook

Long-Term
Outlook

Valuation

Actionability

Consumer
Energy
Financials
Health Care
Industrials
Media
Retail
Technology
Note: Projections May Not Materialize. The information in this presentation may contain projections or other forward-looking statements regarding future events, targets, or expectations regarding the Funds or strategies, and is only current as of
June 2012. There is no assurance that such events or targets will be achieved, and may be significantly different than that shown here. The information in this presentation, including statements concerning financial market trends, is based on
current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

26

2012 Deal Opportunities

We are seeing attractive opportunities across all of our industry groups
Investment opportunities include:
Public-to-privates
Divestitures of non-core subsidiaries of larger corporate parents (carve-outs)
Large, family-owned companies

Structured minority investments with significant influence/governance

Joint ventures/partnerships with corporates seeking growth capital or leverage
reduction
Build-up opportunities
Market dislocations

Note:

Unless indicated, the above reflects the current market views, opinions and expectations of KKR based on its historic experience. Historic market trends are not reliable indicators of actual future market behavior or future performance of any
particular investment or any KKR fund, vehicle or account which, may differ materially, and are not to be relied upon as such. There can be no assurance that investors in any KKR fund, vehicle or account will receive a return of capital.

27

KKR North America Summary

Expect modest economic growth in the U.S.
Attractive environment for private equity investing
Deep bench of talented and seasoned professionals
Differentiated and integrated approach
Strong portfolio of world-class franchises
Continue to generate substantial liquidity
Excellent progress on operational value creation, balance sheet improvement
Portfolio carrying strong momentum into 2012
We are well-positioned to capitalize on this environment
and deliver strong results
Note:

Unless indicated, the above reflects the current market views, opinions and expectations of KKR based on its historic experience. Historic market trends are not reliable indicators of actual future market behavior or future performance of any
particular investment or any KKR fund, vehicle or account which, may differ materially, and are not to be relied upon as such. There can be no assurance that investors in any KKR fund, vehicle or account will receive a return of capital.

28