Is KKR’s $6 Billion Sallie Mae Deal Reshaping Its Long-Term Private Credit Strategy (KKR)?

• Sallie Mae announced a multi-year private credit partnership with KKR, under which KKR will purchase over US$6 billion in private student loans over three years, while Sallie Mae continues servicing the loans and collecting fees.
• This collaboration signals KKR's expanding push into private credit markets and digital infrastructure as it also joins Corastone, a blockchain-based fintech aiming to improve private market transactions.
• We’ll explore how KKR’s partnership with Sallie Mae to acquire student loans could influence its long-term earnings growth narrative.

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KKR Investment Narrative Recap

To own shares of KKR, you need to believe in the long-term growth of private credit, asset-based finance, and the secular shift toward alternative investments. The newly announced Sallie Mae partnership expands KKR’s reach in private student loans, but in the near term, it does not significantly alter the key catalysts, such as fundraising momentum or fee growth, or address the main risk of asset quality and liquidity in an expanding private credit book.

One recent company announcement of interest, the affirmed quarterly dividend of US$0.185 per share, underlines KKR’s continued focus on shareholder returns. Consistent dividends remain important to investors, especially as KKR’s business model faces ongoing challenges from competition and fee pressure across private markets.

In contrast, investors should be alert to the increased exposure KKR has to asset quality and liquidity risks if secular growth trends in private credit...

Read the full narrative on KKR (it's free!)

KKR's narrative projects $13.7 billion revenue and $5.4 billion earnings by 2028. This requires a 13.9% annual revenue decline and a $3.4 billion earnings increase from $2.0 billion currently.

Uncover how KKR's forecasts yield a $157.17 fair value, a 31% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members have set fair values for KKR ranging from US$57.95 to US$170.36, based on 5 independent perspectives. As fundraising momentum remains key to growing fee-paying assets, explore how differing views on growth potential could affect your outlook.

Explore 5 other fair value estimates on KKR - why the stock might be worth less than half the current price!

Build Your Own KKR Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your KKR research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free KKR research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate KKR's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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