Henry Kravis is regarded as a pioneer of the private equity industry. He co-founded Kohlberg Kravis Roberts & Co. L.P., KKR, a leveraged buyout company, in 1976.
As of 2022, Kravis' net worth exceeded $7.5 billion.
- Henry Kravis was made a partner at age 30 at the investment firm Bear Stearns.
- Kravis co-founded KKR with his cousin, George Roberts, and Jerome Kohlberg in 1976.
- He has donated $125 million to his alma mater, Columbia University.
Early Life and Education
Henry Kravis was born on Jan. 6, 1944, in Tulsa, Oklahoma. His father, Raymond Kravis, was a successful oil and gas consultant who served as an advisor to Joseph P. Kennedy Sr., the father of President John F. Kennedy. Kravis earned a bachelor's degree from Claremont McKenna College in 1967, and an MBA from Columbia University in 1969.
Henry Kravis began his career at the Wall Street investment firm, Bear Stearns alongside his cousin George Roberts. Both men worked under Jerome Kohlberg, Jr., the corporate finance manager, where they learned “bootstrap” acquisition, a strategy now known today as a leveraged buyout. Kohlberg sought out undervalued small companies and helped the businesses borrow capital to invest in expansion and acquire additional businesses.
A leveraged buyout, or LBO, is a company's acquisition of another company using a significant amount of borrowed money, leverage, to meet the cost of the acquisition.
One of the team's successful acquisitions was Incom International in 1971. The acquisition brought in $950,000 in fees for Bear Stearns, the largest amount realized in a single transaction. Henry Kravis was made a partner at Bear Stearns at the age of 30.
In 1976, when Bear Stearns would not appropriate the funds for Kohlberg's projects and instead developed an independent leverage buyout division, Kohlberg resigned and encouraged Kravis and Roberts to join him. Together, they founded the investment banking firm Kohlberg Kravis Roberts & Co., KKR.
The objective of KKR in 1976 was to create and manage private equity funds that borrowed money to acquire underperforming businesses. These businesses would be improved and sold at a profit. Over the years, KKR has acquired and invested in a multitude of businesses including its acquisition of RJR Nabisco for $25 billion.
The company holds investments in a wide range of income-producing real estate throughout the United States. This includes office rentals, retail spaces, and health care properties. KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. The firm was listed on the New York Stock Exchange in 2010 and raised $1.25 billion from its initial public offering (IPO).
As of December 2021, the company had $471 billion in assets under management and 1,900 employees, consultants, and senior advisors, working across 20 industries in offices around the world. Henry Kravis served as KKR's Co-Chief Executive Officer until 2021.
What Is Henry Kravis' Investment in Space Flight?
In 2022, Space Perspective has raised an additional $17 million to further the development of its stratospheric passenger balloon system that simulates one aspect of spaceflight, a capsule carrying eight passengers and one crew member to an altitude of about 30 kilometers. The company raised the funding from several new investors, including Silicon Valley Bank, Trinity Capital, and Henry Kravis.
What Organizations Does Henry Kravis Support?
Kravis serves as director, chairman emeritus, or trustee of several institutions, including The Business Council, Claremont McKenna College, Columbia Business School, Mount Sinai Hospital, the Partnership for New York City, and the Partnership Fund for New York City.
How Did Popular Junk Bonds In the 1980s Influence KKR?
In its early years and with the popularity of junk bonds, KKR was able to invest just 10% of a buyout price from its funds, and borrow the remainder from investors through “junk bonds.” In the 1980s these bonds were mostly underwritten by the investment bank Drexel Burnham Lambert and Michael Milken.
The Bottom Line
Henry Kravis is an American investor and billionaire whose success was built through leveraged buyouts. He co-founded KKR in 1976 and serves as its Co-Executive Chairman.