Private equity giant KKR & Co. (KKR) is combining its infrastructure and real estate assets that are worth a total of $157 billion U.S.
The combination comes as the Wall Street investment firm looks to capitalize on the growing convergence between infrastructure and real estate, exemplified by the boom in data centres that power artificial intelligence (A.I.) applications and models.
Raj Agrawal will become global head of a new business unit called “Real Assets,” adding supervision of KKR’s real estate business to his current responsibilities as global head of infrastructure.
KKR says that the reorganization also reflects the fact that most institutional investors treat infrastructure and real estate investing as part of the same strategy.
The newly combined group plans to pursue and acquire logistics businesses, A.I. data centers, and other areas of mutual interest.
KKR’s Real Assets unit will have a combined $157 billion U.S. under management globally across both equity and credit markets.
The infrastructure business returned 18% during the 12 months ended Sept. 30 of last year, making it KKR’s top-performing segment.
Real estate returned 3% over the same period, lagging other asset classes as higher interest rates and a downturn in commercial real estate since the 2020 Covid-19 pandemic continued.
KKR, which acquires companies, turns them around, and then sells or takes them public, said it plans to aggressively target A.I. data centres going forward.
The company recently took private data centre owner CyrusOne and has invested in Gulf Data Hub, one of the Middle East’s largest data centre firms.
KKR is also focusing on climate-related infrastructure investing as a growth area with global temperatures rising and disasters such as the Los Angeles wildfires becoming more common.
The stock of KKR has risen 92% over the last 12 months to trade at $161.51 U.S. per share.