KEN MEHLMAN
MEMBER, KKR
Bloomberg Brief Summary
In an interview with Ainslie Chandler for Bloomberg Brief, Ken Mehlman explains KKR’s commitment to ESG and how it builds these considerations into its investment process by identifying new opportunities to invest, achieving double bottom-line benefits and de-risking companies. Mehlman discusses the process KKR uses to evaluate investments from an ESG perspective and the impact some of those investments have made in the lives of many people. Mehlman also shares insights about what the future holds for KKR and what could be their next big ESG investment.
Mehlman describes the process of KKR’s engagement on ESG issues as “very rigorous.” He explains that the potential company’s “protocol, their processes, their culture, their commitment—[are] examined both in terms of ‘where is the problem?’ but also ‘what can we do to make it better during the course of our ownership?’” The purpose of KKR’s ESG investment is not only to make a smart deal that will yield profit, but also to identify investments with an opportunity to improve the world.
KKR has already invested $5 billion globally for companies committed to ESG missions, Mehlman said. Those investments all have different faces: “We have done a fair bit of investing in food safety in China—starting in dairy and now in chicken and pork,” he said. “We have also invested a lot in water and renewable energy…We’ve done an investment in China in water cleanliness.”
“We expect to invest more in challenges or solutions related to water scarcity,” he added.
When asked about what issues today affect global companies, Mehlman answered that the firm is interested in how companies handle the privacy and protection of their customers. This issue has been highlighted by recent data breaches, he said.
In his opinion, Ken Mehlman does not feel that companies should ever have to choose between ESG best practices and profit. Mehlman explains that “returns are in ESG.” Speaking of an investment by KKR that allowed millions of people to receive adequate retirement pensions, Mehlman said, “The world will only be saved at a profit and the only way you are going to make a profit today is to understand the world. ESG can help you do both.”
AEI Idea Makers Podcast
According to Kenneth Mehlman, Lesson 1 is to find something you’re passionate about and try to get paid to do it. As he said in the video, “I don’t believe that success makes happiness; I believe that happiness makes success.”
Lesson 2 is to “monetize what you know”—that is, have a unique body of knowledge that you can offer to an organization. Don’t go where everyone is like you; go where you are different, so you bring a different perspective and add a different value. As he argued, that way you won’t be monetized “based on how cheap you are and how long you can work; you can instead price yourself based on what you know and what you know that’s different.”
For Lesson 3, he suggested that “life is best lived in chapters.” He used the example of a potted plant that reaches the edge of its pot and then gets transplanted to a larger pot. Its roots still stay the same. As he put it, “a good career is one in which there is a fair amount of repotting.” Ken Mehlman referenced his own 12 years in politics, followed by his 7 years in private equity.
For a fruitful career in public policy, take these lessons and be what Ken Mehlman called a white blood cell, since “white blood cells kill disease; they solve problems. They don’t worry about who gets credit…If you don’t worry about who gets credit, you can accomplish unbelievable amounts of things.” The people who have the biggest impact are the ones who help the people below them as much as they help the people above them—and helping someone above you means telling them what they need to hear, not necessarily what they want to hear.
Bloomberg Markets Ken Mehlman Video
At SuperReturns International 2016 in Berlin, Ken Mehlman spoke with “Bloomberg Markets.” He discussed the 2016 outlook for private equity and KKR’s global vision. He acknowledged that, “there’s a lot of volatility across lots of economies across the world, a lot of industries,” but said that people at KKR look at things optimistically because they see situations like this as being full of opportunity.
In this video, Ken Mehlman attributes KKR’s positive outlook to their patient capital; belief that success is measured over the long-term, not just in quarterly returns; proven ability to add growth and value to the companies they invest in beyond just capital; and ability to invest flexibly. For firms with those qualities, according to this video, now is a good time to invest.
When asked about any surprises or points of focus at the conference, Ken Mehlman responded, “A lot of focus…on the energy space, broadly, and what’s happening there.” In fact, the conference dedicated a full day to Environmental Social Governance (ESG), including a keynote by Al Gore and David Blood. To Mehlman, this is a reflection of where the world is going. Investing successfully today, he says, requires the ability to understand, “where you’re operating, the geopolitical questions, to understand public policy and regulatory issues, and to understand the value that can be created if you can engage effectively with stakeholders.”
Kenneth Mehlman also explains that private equity has the ability to be a solution provider, not a savior, to help build infrastructure, finance retirement, and build better companies. Doing so can generate the returns investors expect, while also helping to solve important societal problems.
For example, according to Mehlman, KKR has invested in three different municipal water systems, modernizing them in a way that is environmentally positive and beneficial to the community. To take advantage of such opportunities, it is necessary to understand the people in those communities.
Finally, Mehlman was asked about regulation. In his opinion, investment should be regulated, so when he meets with government officials or policy makers, it’s less about asking for reduced regulation and more about asking what private equity can do to help and where investment is needed.
OutNEXT Emerging Leader Summit Webinar
Out Leadership recently released a webinar, entitled Inside OutNEXT, which took an in-depth look at how Out Leadership planned and organized their second annual and first global Emerging Leader Summit in July. Hosted by Barclays, the OutNEXT Emerging Leader Summit involved more than 180 emerging leaders from member companies involved in Out Leadership.
The conference took place in New York City at Barclay’s offices, and included best-in-class leadership development content from a wide variety of experts and LGBT community leaders. Speakers included Ken Mehlman, as well as Dorie Clark, Andy Cohen, Jim Obergefell, and David Mixner.
The webinar, which is Out Leadership’s first ever, discusses the approach that the Out Leadership team took to develop the curriculum and content, as well as the work that they are doing to engage the 2015 cohort of emerging leaders from OutNEXT. They also present some of the insights from their social justice hackathon winning teams, as well as a brainstorm on how Out Leadership can help support individual company’s efforts to drive positive impacts.
Ken Mehlman was a member of the Out on the Street Leadership committee and explains some of the benefits of the program. “Out Leadership will help members succeed while making a positive impact. It will help smart businesses share effective tools to recruit and retain the best talent and enhance true meritocracy throughout our firms and society.”
Out Leadership is a strategic advisory firm that connects senior leaders “across the world’s most influential industries to create business opportunity, cultivate talent, and drive LGBT equality forward.” They have hosted leadership summits and seminars on four continents and work with member organizations throughout Europe, Asia, and North America. Member organizations included KKR, Barclays, Bloomberg and Morgan Stanley among 61 other member firms.
KKR Announces New Maternity Perk
Private equity firm Kohlberg, Kravis, and Roberts announced on August 12th that its employees now have the option to bring new children and their caregivers on business trips for up to a year after the child is born, paid for by KKR. Additionally, KKR expanded the leave time it offers to new parents.
KKR is aiming to change the demographic landscape of private equity, where nine out of ten senior managers are men. Women hold 16% of senior positions in investment management according to Catalyst, a nonprofit group.
This year, according to Bloomberg, KKR assembled a council in charge of devising ways to expand the firm’s appeal to “women, minorities, gays and lesbians, who traditionally haven’t entered asset management in large numbers.”
KKR is one of the companies at the forefront of expanding the options available to new fathers and mothers. According to the New York Times, the firm joins companies such as Yahoo, Microsoft, Netflix, IBM, and Goldman Sachs, which have begun offering various maternity benefits.
Such benefits include varying amounts of expanded paid leave, travel accommodations for new parents, and the option to ship breast milk home when away on business, paid for by the company. These companies are expanding their benefits in order to attract and retain talented employees.
Ken Mehlman is quoted in Bloomberg, saying:
“The best and the brightest of the future don’t look like the best and the brightest of the past,” said Ken Mehlman, a KKR partner and former chairman of the Republican National Committee. “This is a necessary first step. I hope the whole industry improves and we all learn together.”
Co-founder George R. Roberts echoes this sentiment, telling Bloomberg:
“Too many same people means too much same thinking,” Roberts, 71, said in an interview. “We found that people were hiring people like themselves. If you want to stifle innovation, if you want to stifle diverse thinking, if you want to stifle creativity, then just keep hiring people like yourself.”
Executives at KKR have made progress over the last three years in addressing the gender gap—statistics from Bloomberg indicate the gender gap at KKR has improved by 7.3%, the highest of all the private equity firms surveyed. While there is still more progress to be made, KKR is on the right track.
Robin Hood Seeks to Match Finance Professionals to Nonprofits
The Robin Hood Foundation announced Leader Link, its initiative to connect experienced financial professionals with nonprofits. The organization is known for its high profile philanthropic activities in New York City to alleviate poverty, hunger, and homelessness. The foundation opened the application period on July 2nd.
The purpose of the program is to funnel financial talent into nonprofit positions where their skills are in high demand. “The last few years, the high-profile financial problems of some high-profile nonprofits have highlighted the need for a competent financial person in these positions,” senior management consultant Deborah Miller said.
Robin Hood seeks to lure experienced professionals in finance to the nonprofit sector to fulfill the more difficult requirements of nonprofit leadership positions, such as reporting, organizational complexity, and the responsibilities that come with high visibility. As government and public scrutiny increases, attracting necessary talent has become a necessity for many nonprofit organizations.
Beginning September 15th, Leader Link will consist of five sessions meant to familiarize participants with the context of nonprofits over the course of a month and a half. Each session will have a different focus, from skill-building to touring local nonprofits. Sessions four and five consist of advice on effective job searches and interviewing, including a one on one practice interview with detailed feedback. Participants will also be paired with a leader of a nonprofit to serve as a mentor throughout and after the program.
The Robin Hood Foundation differentiates itself from other nonprofits by using a system of metrics, called “Relentless Monetization,” which convert different outcomes into monetary worth. These monetary values are used to compare Robin Hood intervention outcomes with what would have otherwise would have happened to the targeted demographic.
Ken Mehlman chairs an advisory board for Robin Hood, joining Jon Stewart, Diane Sawyer, Gwyneth Paltrow, and Eric Schmidt in the organization’s governance. Last year Robin Hood invested $132 million dollars towards fighting poverty.
Updated: 300+ Sign Same-Sex Marriage Brief
Update: According to Slate, the Mehlman Amicus Brief is being considered especially notable among the dozens of other briefs that have been filed. The reason? The brief is signed by 303 conservatives, many of whom have previously opposed gay marriage, and includes notable signers like Senators Susan Collins and Mark Kirk, Massachusetts Governor Charlie Baker, former Pennsylvania Governor Tom Ridge, and retired General Stanley McChrystal.
On Thursday, according to TIME, a friend of the court brief was filed with the Supreme Court that contained more than 300 signatures from veteran Republican lawmakers and consultants. This brief was organized by Ken Mehlman and concerns the April 28th cases that the Supreme Court will be hearing on the issue of same-sex marriage.
Depending on how the court rules, and it is expected that the court will rule by the end of June, these cases could legalize same-sex unions on a nationwide basis.
Signatories to the brief include current and former governors, current and former Republican members of the House of Representatives and Senate, among others. This effort is similar to another effort in 2013, where Ken Mehlman organized another amicus brief for the Supreme Court case that overturned California’s Proposition 8. That brief gathered 131 signatures from prominent Republicans.
According to TIME, the brief makes a conservative case for the court to strike down same-sex marriage bans, and states that the laws that “bar same-sex couples from the institution of civil marriage” are “inconsistent with the United States Constitution’s dual promises of equal protection and due process.”
Ken Mehlman leading new GOP Effort
According to the Washington Blade, Ken Mehlman is leading the effort to gather signatures for a friend-of-the-court brief signed exclusively by prominent Republicans. The document addresses the issue of same-sex marriage, and urges the U.S. Supreme Court to find it a constitutional right when the court considers the recent lawsuits from Michigan, Ohio, Kentucky, and Tennessee.
These lawsuits all cover marriage rights for same-sex couples. The court agreed to hear the cases in January, and is expected to deliver a ruling on the topics by the end of June.
According to sources familiar with the document, the legal arguments of the brief will be similar to the filing made before the U.S. Tenth Circuit Court of appeals, which argued that same-sex marriage promotes stability and mutual support. It is also similar to an earlier brief that Ken Mehlman led in 2013 which argued against the constitutionality of California’s Proposition 8. That brief garnered 131 signatures from within the Republican Party.
Some of those who have affirmed to the Washington Blade that they have signed the current amicus brief previously signed the 2013 brief, while other signatories are new.
Theatrical Memoir to Benefit Point Foundation
Ken Mehlman is one of the event chairs for an upcoming event organized to benefit the Point Foundation on October 27th at New World Stages. This special one-night-only event is presented by Amy and Jeff Towers, directed by Stephen Brackett, and produced by Tim Ranney. This event, entitled Oh, Hell no! is the theatrical tell-all of civil rights activist and author David Mixner.
Other event chairs include Alan Cumming, Robert Desidrio, Herb Hamsher, Judith Light, Rob Smith, Jonathan Stoller, Jorge Valencia, and Edie Windsor.
The event will include stories from David Mixner’s life, and includes a specially assembled trio that features the voices of Chris Bolan, Megan Osterhaus, and Tim Jerone. Mixner is known for his contribution as one of the organizers of the Moratorium to End the Ware in Vietnam, and was a founding member of the Municipal Elections Committee of Los Angeles, the nation’s first gay and lesbian political action committee.
Proceeds will benefit the Point Foundation, a nonprofit group that offers mentorship, leadership development, and community service training to Lesbian, Gay, Bisexual, Transgender and Queer (LGBTQ) students. By empowering these youths to achieve their full academic and leadership potential despite the obstacles in their way, Point Foundation hopes to make a significant impact on society at large.
For more information on the Point Foundation visit their website here: https://www.pointfoundation.org/donate
Private Equity Investment Boosts the Economy
The Private Equity Growth and Capital Council, of which Ken Mehlman is the Chairman, recently released a survey which shows that in the last year private equity firms invested some $443 billion in to approximately 2,300 companies in the United States. Interestingly enough, this is a 27 percent increase from what private equity companies invested in the previous year.
Essentially, as Vice President of research at the PEGCC Bronwyn Bailey explains, private equity firms provide a boost to the economy through their investments, helping to build new factories, create jobs, and generally spur economic growth. Providing investments that allow regional companies to expand also helps consumers have access to additional products, as well as potentially adding tax revenue to the areas that these companies expand into.
These company investments are often years in the making. As a Mainstreet.com piece about the survey explains, it is not uncommon for private equity firms to buy a company to invest in only to sell it nearly a decade in the future. Many of these companies are also older companies, as private equity investment “differs from venture capital firms” in that they do not tend to invest in start ups or flash in the pan social media companies.
Ken Mehlman was elected the new chairman of the Private Equity Growth Capital Council on December 19, 2013. Mehlman also serves as a Member at Kohlberg Kravis and Roberts and is a founding member of the PEGCC.
Read the full piece at http://www.pegcc.org/newsroom/in-the-news/main-street-private-equity-investment-boosts-the-economy-heres-how-your-retirements-at-play/