KKR Credit Income Fund · ASX:KKC
KKR Credit Income Fund — Investor Presentation (March 2020)
21 slides from KKR Credit Income Fund's investor presentation, Mar 2, 2020
Slide 1: Cover letter from The Trust Company (RE Services) Limited
The Trust Company (RE Services) Limited ABN 45 003 278 831, AFSL 235150 2 March 2020 The Manager ASX Market Announcements ASX Limited 20 Bridge Street Sydney NSW 2000 KKR Credit Income Fund Investor Update We are pleased to provide investors with an update for the KKR Credit Income Fund (ASX: KKC).
Slide 2: KKR Credit Income Fund Investor Update
KKR Credit Income Fund Investor Update 2 March 2020
Slide 3: Important Information
Important Information You must read this notice before reading or making any use of this Document or any information contained in this Document. By continuing to read, use or otherwise act on this Document, you agree to be bound by the following terms and conditions, including any modifications to t
Slide 4: Executive Summary
Executive Summary The KKR Credit Income Fund (“KKC” or “the Fund”) aims to provide Australian and New Zealand investors with attractive, risk-adjusted returns and access to KKR’s global credit investments Capital Preservation and Income Throughout the Market Cycle Targeting Income Through the Market
Slide 5: KKC Update
KKC Update Listing A$925m Capital Raised KKC was listed on the ASX on 21 November 2019 and the Responsible Entity through IPO raised A$925m from the initial offer of units in the Fund (“IPO”) Deployment*** +1.34% Deployment of the IPO proceeds in the Global Credit Opportunities Fund (“GCOF”) was qui
Slide 6: KKC - Current Portfolio
KKC - Current Portfolio A$126m Diversified Portfolio of Income Generating Global Credit* Committed, but not funded into European Senior vs. Subordinated Direct Lending Senior 93% SECTOR DIVERSIFICATION Subordinated 5% Industrials Other 2% 8% 7% Information 5% Technology 13% 4% Health Care Floating v
Slide 7: Global Credit Opportunities Fund Investment Themes
Global Credit Opportunities Fund Investment Themes KKR’s strategy in GCOF is to deploy capital across investment themes that take advantage of credit market dislocations, spanning asset types and liquidity profiles Expected Themes Description Weighting • Higher-yielding investments resulting from ma
Slide 8: European Direct Lending Fund
European Direct Lending Fund KKR’s European Direct Lending Fund seeks to provide senior secured capital to established upper-middle market companies Originated financings to companies, primarily in Western Europe 8+ Year Direct Lending Targeting private companies with EBITDA of €25mm+, with a partic
Slide 9: How are we Hedging?
How are we Hedging? Majority of KKC’s Hedges are Long Dated KKR saved on Cost by going Long Dated 60% 1.00% 0.98% 56% 0.95% 50% 0.90% Annualised Cost of Hedge 0.85% 0.25% 40% % of Portfolio 0.80% 30% 0.75% 0.73% 23% 0.70% 20% 0.65% 10% 10% 0.60% 6% 5% Average Weighted 1-2 Years 2-3 Years 3-4 Years 4
Slide 10: Market Update
Market Update CREDIT INCOME
Slide 11: Portfolio companies demonstrate steady revenue and EBITDA growth
Companies in which the KKR Global Leveraged Credit Strategies invest demonstrate relatively steady revenue and EBITDA growth Revenue Growth EBITDA Growth (KKR Global Leveraged Credit) (KKR Global Leveraged Credit) 10.0% 14.0% 9.0% 12.0% 8.0% 7.6% 7.0% 10.0% 9.3% 6.0% 8.0% 5.0% 6.0% 4.0% 3.0% 4.0% 2.
Slide 12: Sub-Industry Momentum
When the Companies in which the KKR Global Leveraged Credit Strategies invest are broken down by sub-industry, there is dispersion Sub-Industry Momentum 55% Home Furnishings 45% Distributors Other Diversified Financial Services Human Resource & Employment Services Specialized Finance 35% Hypermarket
Slide 13: The Flight to Quality Trade Has Gained Velocity
The Flight to Quality Trade Has Gained Velocity Change in Spread Since January 2019(1) BB-BBB Spread at Historical Lows 0% BB-BBB Spread 5 yr Avg Long Term Average 400 -5% 350 -10% -9% 300 -15% Govt Option Adjusted Spread -20% 250 -25% 200 -30% 150 -35% 100 -40% -38% 50 -45% -44% 0 Dec-15 Dec-09 Dec
Slide 14: Performance in the Market is not Uniform
Performance in the Market is not Uniform Month on Month Performance vs. Benchmark Performance by Bond Rating 4.00% 7.00% 3.50% 6.00% 5.00% 3.00% 4.00% 2.50% 3.00% 2.00% 2.00% 1.50% 1.00% 1.00% 0.00% 0.50% -1.00% 0.00% -2.00% -0.50% -3.00% -4.00% -1.00% Sep-19 Dec-19 Aug-19 Jan-19 Feb-19 Apr-19 Oct-1
Slide 15: Focus on Downside Protection
Focus on Downside Protection Seniority Yield to Maturity (“YTM”) 60% Senior 12% Secured 10% 10% 10% 2% 8% 8% 8% 8% 37% 6% 49% 4% 1% 2% 11% 0% Senior Secured Senior First Lien Second Lien Subordinated Bonds Unsecured The majority (60%) of the GCOF portfolio is senior secured i.e. KKR is the first len
Slide 16: Average Prices all above 90% of Par Value
Average Prices all above 90% of Par Value Average Price of GCOF Assets split into its differing Asset Buckets 110 105.2 101.1 100 97.8 95.3 94.8 90 80 70 60 50 • All buckets trade above 90% of Par Value. Par Value = 100% Senior Secured Senior First Lien Second Lien Subordinated Bonds Unsecured GCOF
Slide 17: Concentration is Key to Outperformance
Concentration is Key to Outperformance Position Concentration Position Concentration Trend 100% 100% 90% 80% 70% 68% 60% % of GCOF Portfolio (Market Value) 60% 50% 51% 40% 41% 30% 20% 26% 10% 0% Mar-18 Mar-19 Dec-17 Dec-18 Dec-19 Jun-18 Jun-19 Sep-18 Sep-19 Top 10 Top 20 Top 30 Top 40 Top 50 > Top 5
Slide 18: Appendix
Appendix CREDIT INCOME 17
Slide 19: KKC Investment Team
KKC Investment Team 1 2 KKC Investment Committee 1 CHRIS SHELDON 2 FRANCES LIM Partner, Traded Credit Managing Director, Global KKC Co-Portfolio Manager Macro & Asset Allocation (San Francisco) KKC Co-Portfolio Manager (New York) 3 MATTHIEU BOULANGER 4 JEREMIAH LANE Partner, Private Credit Partner,
Slide 20: Ongoing Shareholder Communication
Ongoing Shareholder Communication Monthly Fact Sheets Media Half yearly investor presentations Industry conferences Half & full year financial results Independent research Monthly NTA announcement www.KKCAustralia.com.au 19
Slide 21: About KKR
In today’s complex global economy, KKR believes success depends on the About KKR flexibility to collaborate on shared opportunities and the strength to work together through challenges. A Leading Global Alternative Investment Firm $US218bn in total assets under management(1) $US73bn credit assets un
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