KKR Capital Markets Overview

Craig J. Farr
July 18, 2012

CONFIDENTIAL

Who Are We?

KKR Capital Markets (KCM) is an established capital markets

business with a team of over 30 dedicated executives that have with
expertise in:
Debt & Equity
Derivatives
Structured Products

Focuses predominately on KKR companies, but also selectively

provides capital markets services to third parties
Activities consist of arranging capital markets
financings/transactions and capital markets advice
Not a trading business

Evolution of the Business

We have evolved from a small team focused on syndicating
excess private equity to a full-service, stand-alone business
able to lead a variety of capital markets transactions globally
through direct investor relationships and structuring skills
2010

2011 &
Today

2007

2008

2009

Large private
equity checks

Credit crisis
closes markets

Markets improve,
opening door
for new deals
and exits

Further improved
Enhanced
capital markets transaction activity
despite volatile
markets

KCM
Professionals: 4

KCM
Professionals: 10

KCM
Professionals: 15

KCM
Professionals: 31

KCM
Professionals: 32

The KCM Team

KKR Capital Markets
Craig Farr
Global Head of KCM

U.S.

Europe

Jeff Rowbottom

Neil Shah

John Empson

Ed Law(1)

James Connolly

Peter Glaser

Valeria Rebulla

Mark Danzey

Greg Guest

Robert Lewin

Taddeo Vender

Sandy Clark

Chris Rulon-Miller

Adam Smith

Cade Thompson

Akhil Bansal

Mark Basile

Doug Brody

Richard Chand

Chris Lee

BV Krishnan

Rex Chung

George Mueller

Corey Flood

Dhiren Mehta

Stanley Ho

Phil Kim

Matthew Kretzman

Tashwinder Singh

Angad Banga

Josh Lederman

Paul Sigfusson

Asia / India

Suruchi Nangia
Mayank Gupta
Simrun Mehta

Previous Experience

(1)
4

Located in New York with Partial US Industry Coverage

Key Activities
Our capital markets business primarily involves acting as an underwriter, arranger,
placement agent, syndication agent, dealer-manager, capital markets advisor or
financing provider across a broad range of transactions
New
Acquisition

Financing

Portfolio
Company

Refinancing

Exit

IPOs

- Leveraged Loans

- New Issue Debt

- Positioning/Valuation

- ABLs/Revolvers

- Bank Amend/Extend

- Process Management

- High Yield

- Bank Negotiations

- Underwriting/Distribution

- Mezzanine

- Exchange/Tender Offers

- Unitranche

- IR/FX Risk Management

- Bridges

- Buyback Execution

Private Equity
- Positioning
- Syndication

- Restructuring Advice

Growth Capital

Follow-Ons
- Marketed/Blocks
- Dribble Outs

Dividend Recaps
Structured Sales

- Pre-IPO Equity
- Equity-Linked Securities
- New Issue Debt

Capital Markets Advice

Capital Structures Security Selection Markets Pricing Transaction Structuring Transaction Execution
5

How KCM Creates Value: Key Pillars

Access to Capital

Idea Generation

Aligned Advice

Product Flow

Best Execution

Holistic Risk
Management

Greater Access to Capital

Led execution/marketing of IPO

6.8x total leverage

Valuation premium to closest peer

Fully underwritten cov-lite

Allocated to sticky" shareholder base,

setting foundation for long-term
monetizations

Flexibility to optimize currency mix at

KKRs option

6 follow ons with an avg. size of ~$1 bn

144A for life / no registration rights

4.5x MOIC

Created unique competition among lenders

to drive commitment size and terms

Syndicated $1,053 mm of private equity

to facilitate the transaction

8.5% KCM participation viewed as a

partnership with relationship banks

Led structuring of the debt financing

Joint-Physical Bookrunner construct

ABL Revolver Excess Liquidity
Covenant-Lite Term Loan

Private capital solution was available

Obtained $5 bn commitment from 10+

banks on favorable terms
Large $2.25 bn reserve-based revolver
and $2.25 bn funded unsecured loan to
bridge to a HY offering

Holistic Risk Management

Centralized information and
best practices

KKR Portfolio Company Interest

Rate Risk
% of Net Debt Which is Fixed / Hedged

Proactive stewardship of
portfolio

90%
80%

77%
68%

70%

66%
56%

60%

~$113 bn of portfolio company

debt refinanced during 2009
YTD 2012(1)

50%
40%
30%
20%

~85% of KKR portfolio

maturities are in 2015 or later

(1)

10%
0%
2012

Reflects all KKR portfolio company refinancings including those in which KKR Capital Markets did not participate.

2013

2014

2015

Benefits Across Key Stakeholders

Source larger, unique deals

Limited Partners

Flexible capital enhances upside

Product flows for limited partners
Better exits

Other Parts of
KKR

Allows PE to focus on industry

specialization/corporate relationships
Expands KAM mezzanine capabilities
Improves CPG relationships
More carry derived from larger equity
commitments

Public
Unitholders

Better capital structures enhance equity

value

Greater return on balance sheet capital

More fund commitments from close limited
partner relationships

How Does KCM Get Paid?

Conventional Model

Bank
4

Bank
3

10

Bank
1

Bank
2

KCM Participation

KCM

Bank
4

Bank
1
Bank
2

Bank
3

Synergy with Other Parts of KKR: Private Equity

Situation
Large maturity towers in 2014

KCM Value-Add

Negotiated with key lenders

Executed 4 large-scale
exchanges over the last 3 years

Resulted in $16 bn of debt

extended to 2018 - 2022

through 2016 and a desire to

proactively extend

Situation
Visant had deleveraged and
KKR was interested in returning
some capital to LPs

11

KCM Value-Add

Dividend recapitalization with

customized terms

Developed anchor orders and

committed capital to ensure
strong market execution

Synergy with Other Parts of KKR: KAM

Situation
Company sought to refinance

KCM Value-Add

Worked with KAM (which

provided mezzanine note) to
arrange senior credit facilities

Aided with an amendment and

incremental term loan to facilitate
a strategic acquisition

debt and desired capital

structure to suit acquisition
strategy

Situation
Sponsors sought committed
financing to support their
acquisition of the Company

12

KCM Value-Add

KCM provided $147 mm senior

credit facility

KAM was an anchor order and

received a full $35 mm allocation

KCM sole-led the deal producing

$3.6 mm of economics for the Firm

Synergy with Other Parts of KKR: CPG

KCMs co-investment channel allows CPG to offer efficient, well orchestrated coinvestment opportunities to prospective and exiting Limited Partners, augmenting
fund commitments
Limited partners desire to co-invest for the following reasons:

Direct source of proprietary deal flow

Access to best-in-class deal teams and company management

Further opportunity to diligence KKR

Differentiated color and insight into the latest sector trends

Opportunity to lower average fees by co-investing on a reduced or no-fee basis

The joint KCM / CPG approach, in particular, to the co-investment process offers
our limited partners:

Streamlined process with frequent dialogue to enhance clarity and maximize efficiency

Best-in-class system for handling compliance and confidentiality issues

13

Synergy with Other Parts of KKR: Balance Sheet

Situation

KKR sought 485 mm of

committed financing to purchase
Pets at Home in a 1 bn

acquisition

Situation
NXP was nearing IPO launch and

seeking to extend maturities,

but desired price protection in a
volatile market

14

KCM Value-Add
KCM underwrote ~20% of the
senior facilities and arranged
100% of the mezzanine
With KCMs knowledge of the
asset and investor relationships,
KCM delivered more debt at a
lower cost and better terms

KCM Value-Add
Partnered with underwriters to
provide a $162.5 mm backstop
on high yield execution
Marketed the transaction to
large existing bondholders and
set stage for successful IPO

2011 Operating Trends

Selectively provided capital markets services to third parties
Third party transactions include companies in which KKR
considering making an investment or companies/sponsors with
whom KCM has a relationship
Apply the same rigorous processes that we use for KKR
transactions

Select new hires and internal transfers to support our significant

organic growth and continue to increase transaction volume
Focused on mid-level and junior resources to support transaction
execution and provide significant operating leverage for our
senior team

15

More Opportunities for KCM to Grow

16

Drivers

Commentary

Recovering private equity and

capital markets

More acquisition finance mandates,

refinancings, and exits

Larger balance sheet

Participate in more underwritings

Increased penetration of
non-KKR opportunities

Leverage the broader KKR platform

to enhance our relationship with
clients

Strategic partnerships in origination

and distribution

Broaden capabilities
and deal flow

Increased bank regulation

Monetize risk management

opportunities in credit, interest
rates and foreign exchange