Seeking Opportunity in the Noise: Private Markets Reframed

The start of 2026 has certainly given investors a lot to digest. Heightened market volatility, ongoing geopolitical tensions, evolving monetary policy, and the accelerating pace of AI-driven disruption have shaped headlines and portfolios in meaningful ways.

But when the investment leaders across KKR’s business lines shared their views on the current landscape, their message was clear: today’s uncertainty is creating opportunities across many asset classes, including private markets. 

As KKR’s investment team sees it, the current environment is less about reacting to noise and more about staying focused on fundamentals.

Below are key takeaways for investors navigating the current landscape.

Private Credit – A Broader Toolkit for Managing Risk

Diversification within asset classes can help mitigate volatility.

Dan Pietrzak, Partner, Private Credit, corrected a common private credit misconception: it is often equated with corporate direct lending alone. In reality, the opportunity set is much broader. Private asset-based finance (such as aircraft leases and business equipment loans) is a growing slice of the private credit pie due to its historically attractive yields, diversification benefits, and vast market size.

Pietrzak underscores the diversification benefits of asset-based finance in a private credit allocation, which seeks to help mitigate portfolio volatility caused by idiosyncratic corporate credit events.

Pietrzak acknowledges recent headlines around elevated private credit defaults and dispersion, particularly in software. However, he notes that areas of stress in well-diversified private credit portfolios thus far have been tied to specific issuers and are not indicative of a sudden or broader shock in the private credit system.

On the effects of AI disruption in private credit, Pietrzak emphasizes the importance of selectivity. KKR focuses on selecting and investing in deeply embedded software businesses with proprietary data and high customer switching costs.

In many cases, “it’s almost like surgery to rip these systems out,” he explains, highlighting why certain businesses may be more resilient than others to the ripple effects of AI.

Private Equity – AI as a Value Creation Tool

AI can reinforce—not disrupt—disciplined investment strategies.

While AI is reshaping industries, Alisa Amarosa Wood, Partner, Private Equity, views it as a tool for value creation.

The question isn’t whether AI will disrupt, but rather, how companies can use it to strengthen their position.

KKR continues to focus on businesses with durable competitive advantages, particularly those with proprietary data and high customer switching costs.

“You want business that have moats around them” Wood notes, adding that AI can deepen those advantages rather than erode them.

These characteristics have long been central to KKR’s private equity approach. Having invested through multiple waves of technological change, from the emergence of the internet to cloud computing, the firm’s experience underscores a consistent lesson: value is not created by chasing innovation itself, but by identifying where technology drives durable improvements in business performance.

In that context, AI is not a departure from the playbook, but an extension of it—another lens through which to identify businesses that can strengthen their competitive position and deliver long-term value.

Infrastructure – The HALO Advantage and AI tailwinds

Mission-critical assets can provide resilient cash flows and benefit from AI tailwinds.

In infrastructure, resilience starts with asset selection.

James Cunningham, Partner Infrastructure, explains that infrastructure assets stand out due to their “HALO” characteristics, namely, they are hard assets with low obsolescence.

“These aren’t just convenient assets. They are mission critical,” Cunningham says, referencing areas like power generation, power distribution, and digital connectivity.

That essential nature has historically translated into durable cash flows across market cycles as contracts are often long-term and regulated.

At the same time, AI is creating a powerful new tailwind. The rapid expansion of data centers is driving demand for power and connectivity infrastructure.

Cunningham highlights the scale of that demand, noting that hyperscalers are expected to spend roughly $500 billion in 2026 alone.

As a result, he acknowledges that some froth is inevitable—but constraints around securing power, permitting, and customer relationships act as natural guardrails against speculative supply.

Echoing the consistent theme, Cunningham underscores that KKR applies the same discipline to infrastructure investments that it employs across all asset-classes, focusing on diversified hyperscaler demand and long-term contracts, where demand visibility is highest and capital preservation is best protected.

With more capital entering infrastructure, KKR is staying competitive through access and execution.

Half of our investments are partnership-driven and built on long-term relationships, and most deals are sourced through bilateral or limited processes, giving us unmatched visibility into opportunities. Moreover, we view infrastructure as stable, but not static, as we employ KKR’s playbook of deriving value over time through growth initiatives, operational improvement, and capital optimization.

Real Estate – Reset and Ready

Repriced valuations and constrained supply are creating a compelling entry point.

For real estate, the story is less about disruption and more about hard asset fundamentals. It is business as usual in many ways, as KKR continues to focus on investing in high-quality housing and industrial assets while optimizing risk-return in both real estate equity and real estate credit.

Julia Butler, Managing Director, Real Estate, highlights that the asset class remains driven by supply, demand, and replacement cost dynamics, rather than technological shifts.

New construction has slowed significantly, while demand remains resilient.

Real estate prices also corrected meaningfully as interest rates increased. Butler notes that this has created historically attractive entry points, especially relative to public markets.

She also notes an additional tailwind: tenants are increasingly favoring higher-quality space. Owning this type of asset can further support returns, whether through attracting or retaining tenants.

In short, the setup for real estate is favorable.  “All of this is setting up for a really attractive vintage,” says Butler.

The Bottom Line – Focus on Opportunity, Not Noise

Across asset classes, a consistent message emerges: private markets may be more resilient than headlines suggest.

For KKR’s, the current environment is not one to fear, but one to navigate with discipline.

As Wood put it, “We’re leaning into that complexity. [And that’s] where we have actually, I think, found very interesting market opportunities.”

So, when uncertainty arises for investors, we encourage them to:

• Stay diversified,
• Focus on quality and resilience, and
• Maintain a long-term perspective.

In a world defined by rapid change, experienced managers with a steady approach can help turn uncertainty into opportunity.

Important Information

General discussions contained within this presentation regarding the market or market conditions represent the view of either the source cited or KKR. Nothing contained herein is intended to predict the performance of any investment. This material is not intended to forecast or predict future events, but rather to indicate potential returns for the asset classes listed above that KKR has observed in the market generally.

The information in this presentation may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved and may be significantly different from that shown here. The information in this Presentation, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. No undertaking, representation, warranty or other assurance, express or implied, is made or given by or on behalf of KKR or any of its respective partners, executives, employees, agents or advisers or any other person as to the accuracy or completeness of the information or opinions contained in this presentation and no responsibility or liability is accepted by any of them for any such information or opinions. Such information or opinions should not be relied upon and are subject to change without notice.

Private investments are speculative and not suitable for all investors, nor do they represent a complete investment program. Private investments include numerous risks, including illiquidity risk, which means investments are typically required to be held for a period before they are eligible for redemption. There can be no assurance that an investment strategy will be successful.

Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision.

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