Investment management behemoth Capital with its $2.6 trillion in AUM announced a partnership with KKR for new ways to bring alternatives into investor portfolios. KKR manages $500 billion, $200 billion of which in credit.

The two firms plan to make hybrid public-private markets investment solutions available to mass affluent investors across asset classes, geographies and channels, starting in the US in 2025. The first strategies will have 60% in Capital chosen public bonds, and 40% in KKR direct and asset-based loans.

Capital CEO Mike Gitlin said “we believe in combining our respective areas of expertise in strategies that are more liquid than standalone private credit.” And Co-CEOs Joe Bae and Scott Nuttall added “we believe individuals should have access to alternative investments and are thrilled to be partnering with Capital Group, which has world-class investment capabilities, strong client relationships and a leading sales and distribution network.”

Matt O’Conor, President of Capital’s Client Group, mentioned “financial professionals tell us that we can add more value by bringing a fuller set of solutions to their clients’ portfolios and are looking to us to be their partner.” Capital has always been strong in distribution for RIAs and financial intermediaries, and KKR should be able to benefit from those inroads as HNW clients are looking to get into private markets. Gitlin stated that out of 290,000 US FAs, some 220,000 have Capital products.

While other long-term focused asset managers such as neighbor Franklin Templeton have focused on acquiring alternatives managers, Capital Group is going the partnership route. The WSJ reported that Capital according to Gitlin spent about two years trying to figure out how to get into alternatives and private credit.

May the games continue.

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