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.