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2017-07-17 11:57:02
Next Generation at K.K.R. Set as It Names Two Co-Presidents

Two of the best-known pioneers in private equity, Henry R. Kravis and George R. Roberts, are joining their industry peers and naming potential successors.

Kohlberg Kravis Roberts announced on Monday that it had named two senior executives, Joseph Y. Bae and Scott C. Nuttall, as its co-presidents and co-chief operating officers.

The appointments will charge Mr. Nuttall, 44, and Mr. Bae, 45, with running the $137 billion firm on a day-to-day basis.

“Today’s announcement is about the future and ensuring we have the right team and leadership structure to serve our clients and partners for decades to come,” Mr. Kravis and Mr. Roberts said in a statement.

In naming their successors, Mr. Kravis and Mr. Roberts are joining other buyout titans in preparing for the days when they step away from the business.

Blackstone has long had an heir apparent in its real estate chief, Jonathan D. Gray, a lifer at the investment giant. Warburg Pincus long ago named Joseph P. Landy and Charles R. Kaye as its chief executives., taking over from the co-founders Lionel I. Pincus and John Vogelstein.

Preparing for succession is not always an easy task. The Carlyle Group hired Adena T. Friedman from Nasdaq in 2011 as its chief financial officer, setting off speculation that she would one day lead the private equity titan. But she left three years later to return to Nasdaq, where she took over as chief executive in November.

And it had hired Michael Cavanagh, a much-lauded executive at JPMorgan Chase, but he left the firm for Comcast a year later.

For Mr. Kravis and Mr. Roberts, the anointment of potential successors is perhaps more notable than for most. The men, cousins who co-founded Kohlberg Kravis 41 years ago, helped put private equity on the map.

The pair led the firm’s pursuit of RJR Nabisco and earned the immortal sobriquet “barbarians at the gate.” Since then, the private equity industry has largely shed its reputation as uncouth raiders and become enormous, with some $820 billion in uninvested capital as of Dec. 31, according to Preqin.

In recent years, the two men have praised the firm’s growing bench, with Mr. Kravis once saying that any of 15 executives could lead the firm should he and his cousin retire.

Among those individuals were Mr. Nuttall and Mr. Bae.

Now they will oversee the modern K.K.R., splitting the responsibilities. Mr. Bae, who joined the firm from Goldman Sachs in 1996, will take over the private equity business and the asset management operations that touch energy, infrastructure and real estate. Among his signature achievements was building the firm’s Asian operations.

And Mr. Nuttall, who previously was at Blackstone, will handle K.K.R.’s debt investing, hedge funds and its growing capital markets unit, as well as corporate development and initiatives for expanding the firm. He has already become a familiar face on Wall Street, having spoken often on the firm’s earnings calls with analysts and having helped shepherd the firm onto the public stock markets.

“They think and act globally, they embody K.K.R.’s core values, and they are two of our most accomplished business leaders, with proven track records of managing large teams, building new businesses and driving value for our fund investors and our public unit holders,” Mr. Kravis and Mr. Roberts said of Mr. Bae and Mr. Nuttall.

The two co-presidents will also join the board of Kohlberg Kravis. Mr. Kravis and Mr. Roberts will remain co-chairmen and co-chief executives.

The promotions come as Kohlberg Kravis Roberts and other investment firms continue to evolve. Though deals like the RJR Nabisco takeover continue to loom large over the industry, these firms have sought to move beyond simple leveraged buyouts. Much of the game over the past decade has been expanding into ever more management businesses, building the amount of assets that the firms control — and can therefore charge management fees for.

Of the four major private equity titans that are publicly listed — K.K.R., Blackstone, Carlyle and Apollo Global Management — the share price of K.K.R. has performed second-best, rising almost 50 percent over the past 12 months.

As Mr. Bae and Mr. Nuttall rise, one of their colleagues will leave: Alex Navab, the head of the firm’s Americas private equity practice, who will retire from the firm. He is expected to eventually search for a job running a business.

“Alex has been an outstanding investor and a remarkable leader of our flagship Americas private equity business over the last decade,” Mr. Kravis and Mr. Roberts said.

(Also leaving, at year end, is Todd Fisher, the firm’s chief administrative officer. The firm said his departure was unrelated to changes at the top, and that Mr. Fisher planned to leave the investment profession altogether.)