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Deal Central & Portfolio Central

Assunta Gaglione-Austin Kathy Chang Lily Yuen

July 20, 2012

Deal Central & Portfolio Central Assunta Gaglione-Austin Kathy Chang Lily Yuen July 20, 2012

The KKR Central IT team

The KKR Central team is a proprietary application development and business intelligence team within global IT

Information Technology Ed Brandman, CIO Corporate IT, Fund & Public Reporting Matt Barnoski EMEA &
Information Technology
Ed Brandman, CIO
Corporate IT,
Fund & Public
Reporting
Matt Barnoski
EMEA &
Private
Markets
Infrastructure
Application
KAM IT
Asia
Americas
KCM IT
Assunta
Architecture
Architecture
Dan Moore
Arthur Wong
Brad Boeye
Scott Lazarz
Gaglione-Austin
Jeff Negrete
Doug Grossman
Ned Moran
Kathy Chang
Lily Yuen
Zhang Dong
Chai
Gorugontula
Saurabh
Bhatla
Amar Shah
Negrete Doug Grossman Ned Moran Kathy Chang Lily Yuen Zhang Dong Chai Gorugontula Saurabh Bhatla Amar

Deal Central Overview

Deal Central Overview
• Deal Central is used to track KKR’s proprietary information about its private markets pipeline

Deal Central is used to track KKR’s proprietary information about its private markets pipeline and portfolio companies. It is a knowledge management tool helping the firm monitor deal flow, investment bank involvement and report progress on diligence and other deal related discussions.

What does this mean for you?

A centralized place to track prospective deals and any new companies you monitor, helping with resource allocation across teams and offices

Change investment status as it progresses through the pipeline

Keep quantitative information current and update qualitative status notes that feed weekly senior management reports

Repository for final deal documentation (IC Memos, 100 Plans, PMC Memos, etc.)

weekly senior management reports  Repository for final deal documentation (IC Memos, 100 Plans, PMC Memos,
Stages of an Investment

Stages of an Investment

Company Status

Ex- Prospect Portfolio Portfolio
Ex-
Prospect
Portfolio
Portfolio

Deal Status

High Monitor Active Priority Completed/Eliminated Priority
High
Monitor
Active
Priority
Completed/Eliminated
Priority
Monitor Active Priority Completed/Eliminated Priority Ongoing status and commentary updates Post IC Memos Track
Monitor Active Priority Completed/Eliminated Priority Ongoing status and commentary updates Post IC Memos Track

Ongoing status and commentary updates

Priority Ongoing status and commentary updates Post IC Memos Track Deal Expenses PMC Reporting Post
Post IC Memos Track Deal Expenses
Post IC
Memos
Track Deal
Expenses
PMC Reporting Post 100 Day Plan
PMC
Reporting
Post 100
Day Plan
Quarterly Ownership & Board Seats
Quarterly
Ownership
& Board
Seats
updates Post IC Memos Track Deal Expenses PMC Reporting Post 100 Day Plan Quarterly Ownership &
Reporting Samples Deal flow stats are used by senior PE management and during capital raising

Reporting Samples

Deal flow stats are used by senior PE management and during capital raising efforts Resource
Deal flow stats are used by
senior PE management and
during capital raising efforts
Resource allocation tools
Aggregated
pipeline deal
flow over
time

Detailed weekly status reports support the MMM

Resource allocation tools Aggregated pipeline deal flow over time Detailed weekly status reports support the MMM
Resource allocation tools Aggregated pipeline deal flow over time Detailed weekly status reports support the MMM

Portfolio Central Overview

Portfolio Central Overview
• Portfolio Central is a proprietary, customized web based application that allows the firm to

Portfolio Central is a proprietary, customized web based application that allows the firm to proactively monitor its private markets portfolio companies

With the inception of Portfolio Central, KKR’s portfolio reporting process has become an industry-leading tool and a competitive advantage providing critical management information for a diverse set of KKR stakeholders, including our LPs.

KKR’s Portfolio Central was a recipient of the 2011 CIO 100 award (1) . The award recognizes projects that advance business strategy through the innovative use of IT.

advance business strategy through the innovative use of IT. (1) Nash, S. Kim “ How KKR

(1)

Nash, S. Kim “ How KKR Used Data Mining For Competitive Advantage” CIO.com 2 Sep 2011.

g e” CIO.com 2 Se p 2011 . http://www.cio.com/article/688776/How_KKR_Used_Data_Mining_For_Competitive_Advantage 8
- Before and After

- Before and After

BEFORE
BEFORE

BEFORE

NOW

Various definitions of financials presented.

Various definitions of financials presented. Portfolio Central used as standard for on boarding a new company.

Portfolio Central used as standard for on boarding a new company.

Deal teams manually creating charts and tables.

Deal teams manually creating charts and tables. Portfolio Companies are directly filing to Portfolio Central, leaving

Portfolio Companies are directly filing to Portfolio Central, leaving the Deal Teams to review and approve

automated financials as opposed to

 

entering the data.

Members and the PMC were receiving 70+ or more individual emails each month

the PMC were receiving 70 + or more individual emails each month Senior management receives 70+

Senior management receives 70+ fewer emails a month

Creation of aggregate portfolio reports were entirely manual where a person was pulling each individual memo and inputting the information in a spreadsheet

memo and inputting the information in a spreadsheet We have systematically consolidated all the data provided.

We have systematically consolidated all the data provided. Various stakeholders receive an automated monthly reporting package including trend and stack-ranking reports.

Deal teams received requests

Deal teams received requests Users can generate their own reports on

Users can generate their own reports on

for the same information at

and ad-hoc basis. There were 0 users

least 2x by various constituents

versus 41 users currently with around 1,500 automated reports generated.

least 2x by various constituents versus 41 users currently with around 1,500 automated reports generated. 9
Financial Filings
Financial Filings

The Monthly* Process

What does this mean for you?

1 2 3 4 5 6 Reporting Populated Final report template template Template emailed to
1
2
3
4
5
6
Reporting
Populated
Final report
template
template
Template
emailed to
emailed to
accepted or
Draft
report(s)
sent to Deal
Team for
review
Deal Team
emailed
marks the
Deal Team;
Portfolio
back to
rejected by
report
financials
Company
Portfolio
the system
‘FINAL’
available to
and/or the
Central
all
Deal Team
- 1
-
1

Every month the portfolio company and / or deal team will receive an Excel reporting template from Portfolio Central.

- 2
-
2

Once you have populated all of the requested information, submit the completed Excel file to PortfolioCentral@kkr.com.

- 3
-
3

You will receive either a rejection notice or an acceptance notice. If the Excel file has been rejected, the reasons will be cited (missing revenue, EBITDA, headcount, etc.) and you can resubmit.

- 4
-
4

You will be sent a draft financial report for the PMC (CPG/LPs on quarter ends).

- 5
-
5

Review and respond to the draft financial report email with either an updated version of the financials or the word ‘final’ in the body of the email.

- 6
-
6

The final version of the report will be sent to you and at this time the financials will be available to the firm.

* Select companies report on a quarterly process

to you and at this time the financials will be available to the firm. * Select

Deal & Portfolio Central Reporting

Deal & Portfolio Central Reporting

Things We Request from You:

Reporting Item Reporting Audience Frequency Portfolio Company Financials Monthly or Quarterly PMC, PE, Capstone,
Reporting
Item
Reporting Audience
Frequency
Portfolio Company
Financials
Monthly or Quarterly
PMC, PE, Capstone, KCM, CPG, LPs
Investor Relations, Macro Team,
Management Committee, Risk
Committee
Investment Committee
Base Case
At Transaction Close
Investment Committees, PE, PMC,
Capstone
Employee & Facilities
Information
Annually
Public Affairs, CPG, PE
Ownership and Board
Seat
Quarterly
Finance, PE, Legal, Regulators,
CPG
Investment Committee
Docs
Weekly
Investment Committees

Coming Soon

Deal Expense Tracking, Tax Contingencies, IB Fees and Form PF

Docs Weekly Investment Committees Coming Soon  Deal Expense Tracking, Tax Contingencies, IB Fees and Form

Who uses the information you provide to us

PMCWho uses the information you provide to us Management Committee Risk Committee Capstone Regional heads Dashboard

Management Committee Risk Committee
Management
Committee
Risk
Committee
Capstone Regional heads
Capstone
Regional
heads
Dashboard Deal & Portfolio Central Dashboard
Dashboard
Deal &
Portfolio
Central
Dashboard

KCMheads Dashboard Deal & Portfolio Central Dashboard CPG Investor Relations Public Affairs Various

CPG
CPG
Investor Relations Public Affairs
Investor
Relations
Public
Affairs

Various constituents use the data. One-off requests have come to us instead of Deal Teams

Examples of recurring and ad-hoc reports created without directly reaching out to Deal Teams include:

PMC Monthly review of revenue, EBITDA, cash flow, and leverage; Covenant headroom alerts

Capstone Margin monitoring; EBITDA flow through

PE Regional Heads Revenue and EBITDA on a monthly and YTD basis and by country; Deal pipeline and sourcing

CPG FTE Headcount; Quarterly Revenue, EBITDA and Net Debt; LP1Pager

Investor Relations Calendar YTD Revenue & EBITDA, Net Debt, Leverage, Debt Maturity; Employee Growth

Public Affairs Annual ESG report ; Geographic trend on employee and facility growth

KCM Portfolio wide debt pricing; Counterparty exposure on revolvers; Projections on interest rate exposure; Interest rate risk management and hedging strategy; IB fees (coming soon)

Finance Ownership & Boardseats; Tax Contingencies (coming soon)

Macro Team KKR GDP Forecast Model

Investment Committee Deal expense vs IC budget tracking; IC review report

Risk Committee Debt maturity analysis and exposure; Revenue and EBITDA correlation trend

Management Committee L3M Revenue and EBITDA; Global Debt Exposure

Investment Committee
Investment
Committee
Macro Team Finance
Macro
Team
Finance
• Management Committee – L3M Revenue and EBITDA; Global Debt Exposure Investment Committee Macro Team Finance

Who uses the information you provide to us

PMC Managem ent Monthly Capstone Committe e review of revenue, Risk Dashboard Regional Committe heads
PMC
Managem
ent
Monthly
Capstone
Committe
e
review of
revenue,
Risk
Dashboard
Regional
Committe
heads
EBITDA,
e
cash flow,
and leverage
Investme
nt
Committe
Deal & Portfolio
Central
CPG
e
Macro
Investor
Dashboard
Team
Relations
Covenant
Public
headroom
Finance
Affairs
alerts
KCM
Central CPG e Macro Investor Dashboard Team Relations Covenant Public headroom Finance Affairs alerts KCM 14

Who uses the information you provide to us

PMC Managem ent Capstone Committe e Risk Dashboard Regional Committe heads e Investme nt Deal
PMC
Managem
ent
Capstone
Committe
e
Risk
Dashboard
Regional
Committe
heads
e
Investme
nt
Deal & Portfolio
Central
CPG
Committe
e
Macro
Investor
Team
Dashboard
Relations
Public
Finance
Affairs
KCM
Margin monitoring
Margin monitoring
Team Dashboard Relations Public Finance Affairs KCM Margin monitoring Change in EBITDA impact on Equity Value

Change in

EBITDA

impact on

Equity Value

Team Dashboard Relations Public Finance Affairs KCM Margin monitoring Change in EBITDA impact on Equity Value

Who uses the information you provide to us

PMC Managem ent Capstone Committe e Risk Regional Committe Dashboard heads e Investme nt Committe
PMC
Managem
ent
Capstone
Committe
e
Risk
Regional
Committe
Dashboard
heads
e
Investme
nt
Committe
Deal & Portfolio
Central
CPG
e
Macro
Investor
Team
Dashboard
Relations
Public
Finance
Affairs
KCM
Geographic
trend on
employee
and facility
growth
Team Dashboard Relations Public Finance Affairs KCM Geographic trend on employee and facility growth 16

Who uses the information you provide to us

PMC Managem ent Capstone Committe e Risk Dashboard Regional Committe heads e Investme nt Committe
PMC
Managem
ent
Capstone
Committe
e
Risk
Dashboard
Regional
Committe
heads
e
Investme
nt
Committe
Deal & Portfolio
Central
CPG
e
Macro
Investor
Team
Dashboard
Relations
Public
Finance
Affairs
KCM
Projections on interest rate exposure Interest rate risk management and hedging strategy
Projections on
interest rate
exposure
Interest rate risk
management and
hedging strategy
Finance Affairs KCM Projections on interest rate exposure Interest rate risk management and hedging strategy 17
Finance Affairs KCM Projections on interest rate exposure Interest rate risk management and hedging strategy 17
Finance Affairs KCM Projections on interest rate exposure Interest rate risk management and hedging strategy 17

Who uses the information you provide to us

PMC Managem ent Capstone Committe e Risk Dashboard Regional Committe heads e Investme nt Deal
PMC
Managem
ent
Capstone
Committe
e
Risk
Dashboard
Regional
Committe
heads
e
Investme
nt
Deal & Portfolio
Central
CPG
Committe
e
Macro
Investor
Team
Dashboard
Relations
Public
Finance
Affairs
KCM
KKR GDP model created using portfolio company operating metrics
KKR GDP
model
created
using
portfolio
company
operating
metrics
Relations Public Finance Affairs KCM KKR GDP model created using portfolio company operating metrics 18

Who uses the information you provide to us

PMC Managem ent Capstone Committe e Risk Dashboard Regional Committe heads e Consolidated debt maturity
PMC
Managem
ent
Capstone
Committe
e
Risk
Dashboard
Regional
Committe
heads
e
Consolidated debt maturity
analysis and exposure
Investme
nt
CPG
Committe
Deal & Portfolio
Central
e
Macro
Investor
Team
Dashboard
Relations
Public
Finance
Affairs
KCM
Trending revenue and
EBITDA correlation
e Macro Investor Team Dashboard Relations Public Finance Affairs KCM Trending revenue and EBITDA correlation 19

Contact Information

Deal Central questions? Please email: DealCentralSupport@kkr.com

Please note that this is NOT the same as emailing DealCentral@kkr.com, which will automatically post your document, comment and/or vcard to the website.

Portfolio Central questions? Please email: PortfolioCentralSupport@kkr.com

Please note that this is NOT the same as emailing PortfolioCentral@kkr.com, which is used to automatically process the official monthly/quarterly financial templates for portfolio companies only.

which is used to automatically process the official monthly/quarterly financial templates for portfolio companies only. 20

Q & A

Appendices

Appendices

Deal Central FAQs

Deal Central FAQs

How to Add a Deal (1 of 2)

1
1

Status Summary Descriptions

High Priority - A deal that has been through the IC process several times and is in active negotiation. There are specific target dates that the team is working towards to complete the transaction.

Priority - A deal that has been through the IC process at least once and has substantial resources and time being committed to it.

Active - Early due diligence or idea phase. Resources have been committed to the effort and there is ongoing research and analysis being done. There is meaningful attention being given to this effort.

Monitor: The bulk of the deals are expected to fall into this category. Research is in maintenance mode including monitoring quarterly financials, press reports and comps in an industry

1
1

Investment Information

Company Name Company Name, as it will appear in all internal management reporting

Deal Code Name Unique code name

CKA- optional nickname used for the company, it will appear in certain reporting

Status refer to status summary below

Industry - Company’s industry group. Sub Industry is optional.

Rollup Company applies if the investment is later acquired by (or rolled up into) an existing portfolio company

Office - Office(s) where the coverage team is located

Country Location of the company

Geography Based on the company’s geographic location

Groupings Used to group companies across industry groups and geographies

company’s geographic location • Groupings – Used to group companies across industry groups and geographies 24

How to Add a Deal (2 of 2)

2 3
2
3
How to Add a Deal (2 of 2) 2 3 2 Answer public company information (Y/N)
2
2

Answer public company information (Y/N)

Deal (2 of 2) 2 3 2 Answer public company information (Y/N) 3 Deal Information •
3
3

Deal Information

Deal Status - refer to earlier status summary

Deal Type e.g. P2P, Secondary, Private Sale

Date Initiated defaults to date of entry unless otherwise populated

Transaction Describe the transaction as you would have it appear in weekly Partner reporting

Transaction Size through EBITDA as indicated

Process: e.g. Proprietary, Limited Process, Auction

• Transaction Size through EBITDA – as indicated • Process: e.g. Proprietary, Limited Process, Auction 25

When a Deal becomes a Portfolio Company

4 5
4
5
When a Deal becomes a Portfolio Company 4 5 4 Additional Portfolio information: • Portfolio Type
4
4

Additional Portfolio information:

Portfolio Type e.g. PE, Capital Solutions, Credit, Principal Investment, etc.

Headquarters as described

Investment, etc. • Headquarters – as described 5 Portfolio Information • Please ignore all fields at
5
5

Portfolio Information

Please ignore all fields at left unless they are highlighted in red

Highlighted fields are all required for portfolio companies and are often aggregated for reporting purposes. They should be populated as described.

for portfolio companies and are often aggregated for reporting purposes. They should be populated as described.

How to Update Ownership and Board Seat Reports (Quarterly)

How to Update Ownership and Board Seat Reports (Quarterly) Update Tips: • All data is carried

Update Tips:

All data is carried forward from the previous quarter.

All data is summarized and emailed to all Private Side Executives. There is a “wall of shame” for those that do not finalize by the due date.

If nothing has changed, you need to finalize the data by selecting “Final” from the dropdown on the left and then Save Changes on the right.

If there have been changes to ownership percentages, board membership or entity structure, please note these in the fields provided. Then, select “Final” on the left, and Save Changes on the right.

please note these in the fields provided. Then, select “Final” on the left, and Save Changes

Submitting IC Memos to “PE IC Docs” for Central storage

Reminders are sent each Thursday to all PE Executives to post their weekly deal updates and post all new IC memos to Deal Central

ONLY send IC documents to peicdocs@kkr.com, most easily accomplished using bcc: when sending your report to the IC itself.

IC documents to peicdocs@kkr.com , most easily accomplished using bcc: when sending your report to the

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