Asset Management Overview

KKR Asset Management Bill Sonneborn Bob Howard Erik Falk

July 17, 2012

CONFIDENTIAL AND PROPRIETARY

For One-on-One Use by

Investment Professionals Only

1 1

IMPORTANT INFORMATION

This presentation is furnished on a confidential basis exclusively to the named recipient to this presentation (the “Recipient”) and is not for redistribution or public use.

The data and information presented are for informational purposes only. The information contained herein should be treated in a confidential manner and may not be

transmitted, reproduced or used in whole or in part for any other purpose, nor may it be disclosed without the prior written consent of KKR Asset Management LLC

(“KAM”). By accepting this material, the Recipient agrees not to distribute or provide this information to any other person.

The information in this presentation is only as current as the date indicated, and may be superseded by subsequent market events or for other reasons. The information

in this presentation has been developed internally and/or obtained from sources believed to be reliable; however, KAM does not guarantee the accuracy, adequacy or

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

other decision. This presentation should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any

investment strategy.

The information in this presentation may contain projections or other forward-looking statements regarding future events, targets or expectations regarding the strategies

described herein, 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and may be superseded by subsequent market events or for other reasons. KAM assumes no duty to, and does not undertake to update forward looking statements.

Participation of KKR Private Equity, KKR Capital Markets, and KKR Capstone personnel in the public investment process is subject to applicable law and inside information

barrier policies and procedures, which may limit the involvement of KKR Private Equity, KKR Capital Markets, and KKR Capstone personnel in certain circumstances and

KAM’s ability to leverage such integration with KKR. Discussions with Senior Advisors and employees of KKR’s managed portfolio companies are also subject to the inside

information barrier policies and procedures, which may restrict or limit discussions and/or collaborations with KAM.

References to “KKR Capstone” or “Capstone” are to all or any of Capstone Consulting LLC, Capstone Europe Limited, and KKR Capstone Asia Limited, each of which is

owned and controlled by their senior management and not by KKR. KKR Capstone uses the “KKR” name under license from KKR. KKR Capstone is not a subsidiary or

other affiliate of KKR.

I

II

III

I KAM Overview Bill Sonneborn

II Credit Platforms Erik Falk

1. Leveraged Credit Platform

2. Direct Lending Platform

3. Mezzanine Platform

4. Special Situations Platform

III Direct Hedge Fund Strategy Erik Falk / Bob Howard

1. KKR Credit Relative Value

2. KKR Equity Strategies

2

TABLE OF CONTENTS

2

I. KAM Overview

4 4

KKR BUSINESS PLATFORM

Note: As of March 31, 2012. Please see Endnotes for important information regarding the calculation of AUM. Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. (1) AUM for the Marketable Securities Division includes non-fee paying AUM. The Marketable Securities Division of KAM claims compliance with GIPS.

• Team of ~45

professionals focused

on building, maintaining

and expanding

client relationships

• Integrated investment

and transaction processes

• Share best practices

across KKR’s portfolios

• Team of ~60 senior

operations professionals

• Work side-by-side with

portfolio company senior

managers on operational

improvements

• ~30 senior industry

experts

• Provides global network

of industry insights

and contacts

Capital Markets & Principal Activities

Marketable Securities Division(1)

KKR Capstone

Senior Advisors Client and Partner

Group (“CPG”) Stakeholder Management

Alternative Investments

Division

Real Assets

Private Equity

Private Markets ($46.0bn AUM)

Public Markets / KAM ($16.3bn AUM)

Marketable Securities Division

Alternative Investments Division

KKR ASSET MANAGEMENT (“KAM”) OVERVIEW

KKR launched KAM as its credit investing business in 2004. Focused on leveraging the intellectual capital of KKR’s more than 800

people, advisors, and 77 PE portfolio companies, KAM currently manages approximately $16.3 billion in assets with over 100 dedicated

employees, including ~60 investment professionals

KAM AUM by Strategy(1)

($ in millions)

• Bank Loans

• High Yield

• Bank Loans Plus High Yield

• Opportunistic Credit

• Mezzanine

• Special Situations (Focus

on Distressed and Rescue

Finance)

• Long / Short Equity

• Long / Short Credit

• Direct Lending

Capital Solutions (multi asset-class products spanning all KKR strategies)

1) Data as of March 31, 2012. Please see Endnotes for important information regarding the calculation of AUM. Note: Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions.

KAM Strategies

5

Separately Managed Accounts

Funds

Special

Situations

$1,366

Mezzanine

$1,412 Leveraged

Credit

$12,239

Private Markets

$919 Equities

Strategies

$371

6 6

SENIOR INVESTMENT PROFESSIONALS

ROLE YEARS OF EXPERIENCE

Marc Ciancimino Mezzanine Investment Analyst 15

Scott Cullerton Private Credit Investment Analyst 9

Erik A. Falk Co-Head of Leveraged Credit 19

Ami Goldfein Public Equities Investment Analyst 11

Frederick M. Goltz Head of Credit and Mezzanine 18

Dev Gopalan Industry Credit Investment Analyst 9

Robert Howard Head of Public Equities 16

Scott Henkin KKR Credit Relative Value 15

Omar Kara Public Equities Investment Analyst 12

Jeremiah S. Lane Industry Credit Investment Analyst 9

Ralph Marron Head Public Equities Trader 29

John Massad Client Portfolio Management (Equity Strategies) 13

Mubashir Mukadam Special Situations Investment Analyst 13

John M. Reed Head Credit Trader 15

Christopher A. Sheldon Co-Head of Leveraged Credit 13

Jason Ridloff Mezzanine Investment Analyst 16

William C. Sonneborn Business Unit Head 20

Lynette Vanderwarker Client Portfolio Management (Credit Strategies) 15

Jamie M. Weinstein Co-Head of Special Situations 13

Nathaniel L. Yap Industry Credit Investment Analyst 12

Nathaniel Zilkha Co-Head of Special Situations 13

The KAM team has ~60 dedicated equity and credit professionals with the 19 senior-most investment professionals averaging nearly

15 years of experience and ability to leverage deep resources

Note: Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions.

KAM INVESTMENT TEAM STRUCTURE

Industry Analysts

KKR Private Equity Industry Groups

Investment Committee

Leveraged Credit

Execution Team

Risk & Trading

~60 KKR Capstone Professionals

~30 KKR Senior Advisors

~30 KKR Capital Markets Professionals

KKR Public Affairs, IT, Legal / Compliance, etc.

Mezzanine

Distressed / Special

Situations

Equities Direct

Lending

7 7

KAM’s focus is on utilizing a fundamental investment approach and leveraging proprietary resources to seek out long-term capital

appreciation and attractive risk-adjusted returns over a 3-5 year investment horizon (not short-term trading or index replication)

Note: Portfolio managers may use some or all of the techniques described above or herein. Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions.

• “Single-platform sourcing”

• KAM’s team has long-standing relationships

with a wide network of issuers

• KKR is a valued client to Wall Street and

often receives priority calls regarding

proprietary deals

• KAM’s Direct Lending, Mezzanine and

Distressed Debt teams have experienced,

dedicated sourcing professionals who are

focused on finding opportunities through PE

sponsors, banks and companies/issuers

• KAM’s team leverages the full KKR network:

Private Equity, KKR Capital Markets, KKR

Capstone, portfolio company management and

KKR’s Senior Advisor network

• We appreciate that our investors have

entrusted us with their capital, and we

steward it as if it were our own

• KAM recognizes that credit investing comes

with limited upside (par) and asymmetric

downside risk

• KAM Investment Committee (“IC”)

requires detailed, proprietary research

and a thorough IC memo for any credit

considered for portfolio inclusion

• Each approved name is re-underwritten

each quarter by the Portfolio Management

Committee; this discipline has resulted in

extremely low default statistics

• Each investment decision is predicated on

a clear thesis, leveraging appropriate Firm

resources and knowledge

• KAM will only invest in a credit once its

deep due diligence analysis has distinguished

a competitive advantage and a differentiated

view relative to the market

• Re-evaluate and re-underwrite each credit

in the quarterly Portfolio Management

Committee meetings

• Active portfolio management process

necessitates ongoing re-evaluation of

portfolio structure and risk measures;

continuous portfolio optimization

Proprietary Sourcing

Capital Preservation

Active Portfolio

Management

KAM INVESTMENT PHILOSOPHY

8 8

KAM INVESTMENT PROCESS


KAM Investment Approval Process

KAM Investment Professionals

KKR Private Equity Investment

Professionals

KKR Capital Markets

KKR Senior Advisors

KKR Relationships

KAM Analysts

KKR Private Equity Professionals

KKR Capstone

KKR Senior Advisors

KKR Portfolio Companies

Initial Investment Discussion

Final Investment Approval

Active Portfolio Management

Sourcing Due Diligence

9

CREDIT INVESTMENT STRATEGIES

Note: KAM will consider a number of factors, including, for example, projected cash flows, projected future valuations of target assets and businesses, relevant other market dynamics (including interest rate and currency markets), anticipated contingencies, and regulatory issues. Actual results and events may, however, differ materially from the assumptions underlying such analysis. Such returns are subject to significant economic, market, and other uncertainties that may adversely affect the performance of actual investments. Investments may be acquired in respect of any KAM fund, vehicle of account that have an anticipated internal rate of return below or above the projected return indicated herein. Such projections are neither guarantees nor predictions or projections of future performance of any KAM fund, vehicle or account, and are not to be relied upon as such. There can be no assurance that any particular investment or strategy will achieve such returns, that KAM will achieve the investment objectives noted above or that investors in any KAM fund, vehicle or account will receive a return of capital. An investment’s targeted gross and net internal rate of return may change over time and may go down as well as up.

KAM has a number of active investment strategies across its Marketable Securities and Alternative Investments divisions that

represent a range of risk/return and liquidity profiles



Bank Loans Bank loans based on fundamental credit analysis, with a significant focus on principal protection

Bank Loans Plus High Yield

Bank loans and high yield based on fundamental credit analysis, with a significant focus

on principal protection

High Yield High yield bonds based on fundamental credit analysis

Opportunistic Credit

Dynamic allocations to bank loans, high yield,

mezzanine and distressed debt

Mezzanine Directly sourced mezzanine financings

Special Situations Strategic investments in

distressed companies

Retu

rn

Po

ten

tial

Risk

Proprietarily sourced senior debt financings Direct Lending

II.1 Leveraged Credit Platform Marketable Securities Division

The Marketable Securities Division of KAM claims compliance with GIPS.

• Member of KKR and Co-

head of Leveraged

Credit; joined KKR in

2008

• Former Managing

Director at Deutsche

Bank Securities Inc.

where he was most

recently Global Co-Head

of the Securitized

Products Group

• Over 19 years of

industry experience

• Member of KKR and Co-

head of Leveraged

Credit; joined KKR in

2004

• Former Vice President,

Senior Investment

Analyst at Wells Fargo

Bank, High Yield

Securities Group


experience in leveraged

credit

11

LEVERAGED CREDIT SENIOR INVESTMENT TEAM

~60 KKR Capstone Professionals(1)

~60 Dedicated KAM Investment Professionals

~30 KKR Capital Markets Professionals(1)

~150 KKR Private Equity Investment Professionals(1) ~30 KKR Senior Advisors

Experienced Team with

Diverse Backgrounds

Erik Falk, Co-Head Chris Sheldon, Co-

Head Nat Yap Jeremiah Lane John Reed

• Joined KKR in 2004

• Former senior

investment analyst at

J.P. Morgan

specializing in paper,

packaging and

chemicals


experience in

leveraged credit


• Former Associate in

the Investment

Banking/Technology,

Media and Telecom

Group at J.P. Morgan

Chase

• Over 9 years

industry experience

• Head of Credit

Trading; joined KKR in

2008

• Former Associate

Director at Bear

Stearns & Co. in

Institutional Sales &

Trading


industry experience

Leveraged Credit Senior Team

(1) Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. Marketable Securities

Division

Dev Gopalan


• Former Principal at the

Canada Pension Plan

Investment Board in

Private Investments

and Private Debt

• Over 9 years

industry experience

LEVERAGED CREDIT STRATEGY OVERVIEW

12

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PP

OR

TU

NIT

Y

IN

VE

STM

EN

T

OB

JEC

TIV

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PO

RTFO

LIO

FO

CU

S

IN

CEP

TIO

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Secondary

Market Trading

Asset-Based

Financing

Private Lending/

Recapitalizations

Control

Investing Bank Loans

Bank Loans

Plus High Yield High Yield Opportunistic Credit

• Strong risk-adjusted

return potential

• Senior position in

capital structure

• Call protection based on

discounted purchase price

• LIBOR floors on growing

percentage of loans

• Strong risk-adjusted return

potential


return potential

• Favorable market technicals

• Relative liquidity

• Call Protection


return potential

Outperform above the relevant

LSTA index over a 3 to 5 year

period while focusing on the

most senior part of the

capital structure

Outperform above a blended

index comprised of the Merrill

Lynch HY index and LSTA

index over a 3 to 5 year period

Outperform above the Merrill

Lynch HY index over a 3 to 5

year period

Outperform above the Merrill

Lynch HY index over a 3 to 5

year period

Bank loans based on

fundamental credit analysis,

with a significant focus on

principal protection

Bank loans and high yield

based on fundamental credit

analysis, with a significant

focus on principal protection

High yield bonds based on

fundamental credit analysis,

with a significant focus on

principal protection

Dynamic allocations

across the full spectrum

of below investment grade

credit markets

October 2004 July 2008 October 2004 May 2008


Note: There is no guarantee that any investment objective will be met.

PERFORMANCE HISTORY FOR MARKETABLE SECURITIES STRATEGIES AS OF MARCH 31, 2012

13 Note: See Endnotes for important information relating to the information presented herein. The High Yield Carve Out is supplemental to the GIPS performance presentations shown in the Endnotes. Past performance is not indicative of future results and there can be no assurance that comparable results will be achieved in respect of such strategies going forward or that investors in any KAM fund, vehicle or account will receive a return of capital.

Inception-to-Date Annualized Performance vs. Benchmark by Strategy


10.9%11.4%

16.7%

10.2%10.7%

15.0%

8.1%8.1%

10.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Bank Loans Plus High Yield

(65% LSTA / 35% BoA ML HY) Inception July 2008

High Yield Carve Out

(100% BoA ML HY) Inception September 2004

Supplemental Information

Opportunistic Credit

(100% BoA ML HY) Inception May 2008

KAM Gross KAM Net Benchmark

II.2 Direct Lending Platform Marketable Securities Division

The Marketable Securities Division of KAM claims compliance with GIPS.

• Member of KKR and Head of KAM Credit and Mezzanine


• Former Co-head of the Energy and Natural Resources private equity team

• Over 19 years of industry experience

• Member of the KAM and Capital Solutions Investment Committees

15 15

SENIOR LEVERAGED CREDIT INVESTMENT & ORIGINATION TEAM



~60 Dedicated KAM Investment Professionals and Trading Team

~30 KKR Capital Markets Professionals

~150 KKR Private Equity Investment Professionals ~30 KKR Senior Advisors

• Member of KKR and Head of KAM


• Former President and COO of The TCW Group, Inc.

• 19 years of industry experience

• Member of the KAM and Capital Solutions Investment Committees

Bill Sonneborn

• Member of KKR and Co-head of Leveraged Credit; joined KKR in 2008

• Former Managing Director at Deutsche Bank Securities Inc.; Global Co-Head of the Securitized Products Group

• Over 19 years of industry experience

Erik Falk


• Formerly Managing Director with GSC Group in the European Mezzanine business

• Over 15 years industry experience in sourcing and evaluating middle and large market transactions

Marc Ciancimino


• Former senior investment analyst at J.P. Morgan specializing in paper, packaging and chemicals

• Over 11 years of experience in leveraged credit

Nat Yap


• Formerly at Credit Suisse/Donaldson, Lufkin & Jenrette specializing in leveraged finance

• Over 15 years industry experience

Jason Ridloff


• Former Vice President at GE Capital focused on media and healthcare


Doug Tapley

• Member of KKR and Head of KCM; joined KKR in 2006

• Former Managing Director and Co-Head of North American Equity Capital Markets at Citigroup

• Member of Risk Management Committee

Craig Farr

Fred Goltz

• Member of KKR and Co-head of Leveraged Credit; joined KKR in 2004

• Former Vice President, Senior Investment Analyst at Wells Fargo Bank, High Yield Securities Group

• Over 13 years of experience in leveraged credit

Chris Sheldon


• Former Associate in the Investment Banking/Technology, Media and Telecom Group at J.P. Morgan Chase


Jeremiah Lane


• Previously, Principal in Private Investments at Canada Pension Plan Investment Board


Dev Gopalan


• Former Vice President at Morgan Stanley Capital Partners; initial member of Morgan Stanley’s renewed Private Equity group


Scott Cullerton

• Member of KKR and Head of KCM Europe; joined KKR in 2008

• Former Head of JP Morgan’s European leveraged capital markets business


John Empson

• Co-Head of KCM North America; joined KKR in 2009

• Former Managing Director and Head of U.S. High Yield Capital Markets at Barclays Capital


Jeff Rowbottom

Experienced Team with Diverse Backgrounds


• Former Managing Director at Barclays in Investment Banking focusing on leveraged finance


Peter Glaser

Denotes KCM employees who are not employed by KAM


WE BELIEVE REFINANCING SUPPLY WILL SIGNIFICANTLY EXCEED DEMAND

• Despite the recent flurry of

refinancing activity,

significant volume remains in

the middle market space

• Traditional capital providers

are impaired

– Few new CLOs are being issued

– The bulk of existing CLOs are

exiting their reinvestment

periods

– Consequently, one of the

largest historic suppliers of

capital has largely left the

market for the time being

16

(1) As of March 31, 2012. “Middle Market” is defined as issuers with EBITDA of $50 million or less. Standard and Poor’s LCD Middle Market Lending 1Q12 Review.

(2) As of July 25, 2011. Source: LCD News.

Middle Market Loan Par Outstanding Volume ($ billions)(1)

Number of CLOs In Reinvestment Period(2)

1.63.4

5.3 5.9 6.1 6.9 7.0

10.6

16.8

20.7 20.418.5 18.3

11.8

14.4 13.7

$0

$5

$10

$15

$20

$25

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

196

161

114

48

2 0

0

60

120

180

240

2010 2011 2012 2013 2014 2015

Note: This presentation reflects the current market views, opinions and expectations of KAM based on its historic experience. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment or any KAM fund, vehicle or account which, may differ materially, and are not to be relied upon as such. There can be no assurance that investors in any KAM fund, vehicle or account will receive a return of capital.

Marketable Securities

Division

17

ENVIRONMENT LEADS TO LENDER-FRIENDLY TERMS

• Middle market debt presents

potential for favorable terms

and structure

– Leverage levels are lower

– Spreads are wider

– Terms are tighter

– Coverage ratios are higher;

– Often come with arrangement

fees and / or OID

• We are seeing compensation

for middle market transactions

through structure and pricing,

which was not as apparent in

2007

Note: The information in this slide is intended to be generally indicative of a company's capital structure as well as the terms of middle market investments in a typical leveraged buyout transaction, based on KAM's experience, its belief as to current market conditions and its expectations as to market conditions in the near future. The actual capitalization of KKR Direct Lending Strategy’s portfolio companies and the terms of its investments may differ substantially from this illustration on a case-by-case basis. There can be no guarantee that future capital structures or investment terms will correspond with KAM's expectations. “Middle Market” defined as issues with annual EBTIDA of $50 million or less. (1) Source: LCD Quarterly Leveraged Lending Report. Data as of March 31, 2012.

Typical Transaction Comparison

Large Corporate Middle Market Large Corporate Middle Market

Subordinated Debt

Senior Unsecured

Senior Secured Debt

6.2x 5.6x

4.5x

4.3x

Below 3.25x Secured Leverage

2007 Vintage 2011 Vintage

Large Corporate Middle Market

Nominal Spread(1) 568bp 701bp

Call Protection Not frequent Hard or soft call

Fee / OID Often small OID Typically significant fees or OID;

2-4%

Covenants Limited; mostly incurrence based Extensive; mostly maintenance based

Diligence Syndicate level Much more than syndicate level

Documentation Borrower-friendly Creditor-friendly

Investors Wide syndication, Including CLOs,

mutual funds, hedge funds and banks

Likely to be limited to relationship investors with long-term investment horizon


18

KKR DIRECT LENDING STRATEGY SUMMARY

(1) Based on current market rates and conditions, subject to change. (2) Target returns are based on statistical analysis of historical information. There is no guarantee that targeted returns will be realized or achieved or that an investment strategy will be successful. Investors should keep in mind that the securities markets are

volatile and unpredictable. There are no guarantees that the historical performance of an investment, portfolio, or asset class will have a direct correlation with its future performance. Note: Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions.

Strategy

Sourcing Proprietarily sourced secured debt either through direct origination or “clubbed” situations from 3rd parties

Seniority Focus on secured debt; primarily 1st lien (at least 75%) and some 2nd lien loans and bonds

Target Pricing

Cash coupons of L + 5-9% with PIK of 0-5%;

Total Coupon: L+ 5-10%;

Libor floors of 1-2%;

OID/Fees in the 1-4% range

Size Focus on middle market companies:

$25 to $100mm of EBITDA

Documentation Highly-negotiated, well-structured transactions

Financing Proceeds Financings primarily for acquisitions, recapitalizations,

leverage buyouts, growth, working capital and/or general corporate purposes

Leverage Seeks 1.5x-2.0x leverage with financing rates of L+250bp(1), gross equity returns in the high teens(2)

Liquidity Low liquidity

Geography Global, with a North American focus

Targeted Returns Target net returns in 11-14% range(2)


WASTEQUIP

Company Overview

• Wastequip is the largest manufacturer of waste handling and recycling equipment used to collect, process and transport solid and liquid waste in North America, with product lines that include steel containers, plastic containers, hoists, compactors, balers, tarpers, vacuum trucks, parts and services

• Founded in 1989, Wastequip is headquartered in Charlotte, North Carolina and has 24 manufacturing facilities in North America

• The Company serves over 5,000 customers nationwide, including national, regional and local waste haulers, chain and convenience stores, municipalities, distributors, and recycling companies

KKR Edge

• KKR has a strong relationship with the transaction intermediary, Goldman Sachs, with different parts of KKR having been an important client to Goldman for a number of years. This relationship was not just institutional in nature; the KKR deal team also had prior relationships with the deal team at Goldman

• KKR had followed this situation for over a year, first as a distressed opportunity and then anticipating the new issue. As a result, we were able to act quickly, drive terms, and invest in a meaningful size across KAM’s managed funds and accounts

Situation Overview

• Wastequip (“the Company”) completed a recapitalization on June 15th, 2012. The recapitalization included a new $150 million term loan and $40 million revolver. Proceeds from the Term Loan were be used to finance a restructuring

• Through recapitalization, Wastequip eliminated over $500 million of debt and reduced its annual interest expense by over 80%

• The investment opportunity arose because of KAM’s relationship with the transaction intermediary, Goldman Sachs, and focus on the name when it was distressed, highlighting the benefit of KAM’s multi-strategy approach

Investment Thesis / Risks / Diligence

Investment Thesis

• Strong market position: Company derives 90% of its revenue from products in which it has a leading position. On the steel products side of the business, Wastequip is the only company in North America with national scale and is 5x the size of its next largest competitor

• Company is early in its cycle and has solid earnings momentum: LTM EBITDA of $38m vs. peak of $77m and trough of $19m. Backlog/orders are improving significantly

• Non‐discretionary nature of product/market. While timing of purchases of waste

equipment can be delayed, and the waste equipment market is highly cyclical, over time we believe waste collection is essential and growing, and the company’s products are essential to this

• Localized market for steel products

• Free Cash Flow Profile: LTM EBITDA of $38m vs. FCF breakeven of $17m ($5m capex and $12m cash interest)

• Low debt / historical EV

Investment Risks

• Plastics business has seen continued top-line declines through 2011

• Highly cyclical industry – the majority of products are large-ticket discretionary goods, in addition, waste collection is tried to construction

• Commodity inputs – steel and resin together represent half of COGS, or 40% of revenue

Summary of Terms

Transaction Overview • Borrower/Company: Wastequip, LLC (the “Company”) • Industry: Waste Handling / Recycling • Geography (Headquarters): United States (Charlotte, NC) • Purpose: Refinance Existing Term Loan • Sponsor/Corporate: Centerbridge • LTM Revenue / EBITDA: $344.0 million / $38.0 million • Sr. Sec / Total Leverage: 3.9x / 3.9x

Facility Overview • New Facility: Senior Secured Term Loan • Facility Size: $150 million • KKR LP Hold: $24.8 million • UOP: Restructuring • Key Terms: L+675, 1.50% LIBOR Floor, 97.5 OID, 1% amortization

19 Marketable Securities Division

THINGS REMEMBERED

20

Situation Overview

• Things Remembered Inc. (“Things Remembered”, or “the Company”), headquartered in Highland Heights, Ohio, is the leading destination for personalized gifts in the U.S. with 40 years of brand history. It was previously acquired by private equity firms Bruckmann, Rosser, Sherrill & Co. and Gordon Brothers Merchant Partners in 2006

• On April 22, 2012, Madison Dearborn Partners signed a definitive agreement to acquire Things Remembered for a purchase price of $295mm, or ~7.5x LTM pro forma adjusted EBITDA

• The financing structure is as follows: $30mm Senior Secured Revolver, $117mm Senior Secured Term Loan, $30mm Mezzanine Notes, and $163mm equity contribution from the sponsor, management, and mezzanine investors

• KCM acted as the Lead Arranger and Lead Bookrunner for the Senior Secured Facilities around KAM’s commitment. KAM committed to $35mm of the tranche

Investment Thesis / Risks / Diligence

Investment Thesis

• Leading player in the personalized gift space. As evidence of the uniqueness of its concept, most customers cannot name a competitor

• Strong management team that has led impressive improvement in business since taking over in 2006; resilient performance during the recent economic downturn

• Attractive customer demographics, with high degree of loyalty and strong database

• Lower than average seasonality given event-driven nature of purchases (weddings, birthdays, etc.)

• Highly profitable store base with strong unit level economics

• Opportunities for business improvement including both store growth and direct channel/online growth, as well as driving personalization revenue through new initiatives

Investment Risks

• Limited history operating at current profitability levels -business had underperformed prior to current management team

• Competitive landscape is benign today, but there is potential for increased pressure

• High operating leverage with rent adjusted leverage of 5.5x

• Mall-based, discretionary retailer dependent on keeping fresh product in the stores

• Execution risk. Management is in the process of finalizing an acquisition and plans to open new stores to further expand the business

Summary of Terms

Transaction Overview • Borrower/Company: Things Remembered • Industry: Retail • Geography (Headquarters): United States (Highland Heights, OH) • Purpose: Sale • Sponsor/Corporate: Madison Dearborn Partners, LLC • LTM Revenue/EBITDA: $305.0million / $41.4million • Sr. Sec / Total Debt: 2.8x /3.5x

Facility Overview • Facility: Senior Secured Term Loan • Facility Size: $117 million • KKR LP Hold: $35 million • UOP: Acquisition Financing • Key Terms: L+650, 1.5% LIBOR floor, 98.0 OID (plus underwriting fees), 1%

amortization, 101 soft call for year 1, 50% FCF sweep; 40mm Incremental Facility subject to leverage test, maintenance covenants and MFN

Company Overview

• Things Remembered operates in the highly fragmented $15bn U.S. gift industry and is a leading destination for personalized gifts in the U.S. The majority of their products sold are engraved

• The company operates a broad geographic network of 650 retail locations in 49 states, as well as a rapidly growing online business

• All locations are equipped with engravers. Proprietary products are designed to establish emotional connection with the customer and create high levels of customer satisfaction

• High quality retail model in a variety of configurations with good growth and strong store-level margins across both full store locations and smaller footprint kiosks

KKR Edge

• KKR has significant credit investment experience in the retail space

• This deal highlights KKR’s capability as a one-stop-shop, complementing its ability to offer investment strategies across flexible pools of capital with its capital market platform. Our level of input is a direct result of our early involvement with the Company and sponsors as a potential capital markets arranger, mezzanine provider, or lending partners investor

The investments shown on pages 26 though 31 represent all transactions completed in KKR Lending Partners LP as of March 31, 2012. The specific investments identified are not representative of all of the investments purchased, sold or recommended for KAM clients, and it should not be assumed that the investments identified was or will be profitable. Actual holdings will vary for each client and there is no guarantee that a particular client’s account will hold any or all of the investments listed.


21

KKR DIRECT LENDING STRATEGY MODEL TRACK RECORD

37 Obligors, 43 individual

transactions; ~$1.8 billion

invested

• 35 1st Lien deals, 8 2nd Lien deals

• 75%/25% reweighting of 1st vs.

2nd lien more indicative of the

proposed strategy

– Generated a 8.2% unlevered

gross IRR, outpacing broad

market leveraged loans, as

represented by the S&P LSTA

index returns of 5.0%

– Applying leverage, 5 year

hypothetical returns would be in

the mid-teens

Note: See page 1 for important information relating to the information presented herein. Past performance is not indicative of future results and there can be no assurance that comparable results will be achieved in respect of such strategies going forward or that investors in any KAM fund, vehicle or account will receive a return of capital. All data is as of March 31, 2012. The performance presented reflects model performance an investor may have obtained had it invested in the manner shown and does not represent performance that any investor actually attained. The model performance presented is based upon the following assumptions: leverage calculation assumes 70% advance rate, financing rate of L+225, and upfront fee of 1.5% and a 3 year investment period with a turnover of 30%. Calculation assumes current 5 year swap rate. Credits chosen for the track record meet all of the following criteria: KAM participated in more than 15% of the tranche at the time of trade, secured transactions only, time period from KAM inception to March 31, 2012. Certain of the assumptions have been made for modeling purposes and are unlikely to be realized. No representation or warranty is made as to the reasonableness of the assumptions made or that all assumptions used in achieving the returns have been stated or fully considered. Model returns have many inherent limitations and may not reflect the impact that material economic and market factors may have had on the decision-making process if client funds were actually managed in the manner shown. Actual performance may differ substantially from the model performance presented. Changes in the assumptions may have a material impact on the model returns presented. Strategy was based in a declining rate environment. Other periods selected may have different results, including losses. There can be no assurance that KAM will achieve profits or avoid incurring substantial losses.

KAM Model Gross Unlevered Performance vs. S&P LSTA

KAM IRR S&P LSTA

KKR Direct Lending Strategy (75% 1st Lien/25% 2nd Lien) 8.2% 5.0%

KAM Gross Hypothetical Performance Assuming Leverage Deployment

Annualized

1 year 3 year 5 year

15.7% 17.0% 17.9%

Cumulative

1 year 3 year 5 year

15.7% 60.3% 127.7%

KKR Direct Lending Strategy Deal Volume & Gross Unlevered IRR Since 2005 ($mm)

$71.5

$407.4

$359.9

$0.0

$237.6

$373.3$362.5

9.1%

6.3%4.6%

14.8% 14.2%

10.4%

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

0%

5%

10%

15%

20%

2005 2006 2007 2008 2009 2010 2011

Notional Gross IRR

II.3 Mezzanine Platform Alternative Investments Division

The Alternative Investments Division of KAM does not claim compliance with GIPS.

• Member of KKR and Head

of KKR Credit and

Mezzanine


• Formerly Co-head of the

Energy and Natural

Resources private equity

industry team

• Over 18 years of industry

experience

• Member of the KAM and

Capital Solutions

Investment Committee


• Formerly Managing

Director with GSC Group

in the European

Mezzanine business

• Over 15 years industry

experience in sourcing

and evaluating middle

and large market

transactions

MEZZANINE SENIOR INVESTMENT TEAM

23






Diverse Backgrounds

Fred Goltz, Head of Mezzanine

Marc Ciancimino Jason Ridloff Doug Tapley


• Formerly at Credit

Suisse/Donaldson,

Lufkin & Jenrette

specializing in

leveraged finance

• Over 15 years industry

experience

• Joined KKR in March

2006

• Formerly Vice President

at GE Capital

specializing in media,

communications and

healthcare


investment experience

(1) Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. Alternative Investments

Division

Scott Cullerton


• Former Vice President at Morgan Stanley Capital Partners; initial member of Morgan Stanley’s renewed Private Equity group


Mezzanine Senior Team

24

SIGNIFICANT DEMAND DRIVER FOR MEZZANINE OVER COMING 5 YEARS

Numerous

non-sponsor

companies with

financing needs

~$380 billion of

un-invested private

equity capital

commitments

seeking transactions(1)

Additional deal

flow expected to be

driven by ongoing

restructuring of

corporate landscape

~$850 billion of

leverage debt

due for

refinancing in

next 5 years(2)

Majority of

Mezzanine investors

are focused

on smaller sized

transactions

Over $70 billion of

mezzanine capital

raised globally in

last 5 years, at least

half of which

has already been

invested(1)

Demand Supply

• We believe private equity activity and a major wave of refinancings will drive a significant demand for mezzanine

• We believe this demand is relatively under-supplied due to the limited amount of mezzanine capital available

(1) Source: Preqin; data based on global fundraising as of April 2012. (2) Debt maturities from JP Morgan, as of December 2011. Alternative Investments

Division

25

KEY STEPS TO STRONG MEZZANINE INVESTING

• Global network

• Integrated “One-Firm”

origination capabilities

• Leverage KKR’s scale advantage with

Wall Street

• ~ $3 billion of KAM-sourced deals

since inception in 2004

Sourcing

We believe that the following characteristics distinguish KKR’s approach to mezzanine investing:

• Integrated approach

• ~60 Investment professionals

• Industry aligned verticals with private

equity teams

• Underwriting process: private equity-

like diligence

• Invest only when a competitive

advantage exists

Diligence

• High attention to governance issues

• Intensive regular review of

companies/instruments

• Ability to be active investors

Portfolio Construction and Management

KKR Mezzanine Deals Done in Last 5 Years(1)

(1) Portfolio companies presented represent all suitable mezzanine investments from the period 2005 – March 31, 2012. The specific companies identified are not representative of all the companies purchased, sold or recommended for clients, and it should not be assumed that an investment in the companies identified was or will be profitable. Alternative Investments

Division

• Mast, a subsidiary of Limited Brands (“Limited”), is an international apparel sourcing and logistics company that acts as an intermediary between their clients, North American-based specialty retailers and their partners, apparel factories throughout Asia and South America.

• Mast is the #3 player globally in apparel sourcing by market share. The Company offers its customers customized design, sourcing, and logistics value-added services that are mission-critical to its customers. For Mast’s specialty retailer customers, lowest price sourcing is secondary to quality and flexibility.

• Mast’s current customers are comprised of Express, Chico’s/White House Black Market, New York & Company, Victoria’s Secret Direct, Limited Stores, Lane Bryant, and Christopher & Banks.

• Mast generated LTM 6/30/11 revenue and PF Standalone EBITDA of $1,039 million and $38 million, respectively.

Company Overview Transaction Overview

KKR Approach

• On September 13, 2011, Sycamore Partners signed an agreement to acquire Mast Industries, Inc. for a total purchase price of approximately $227.5 million. The EV of the business represents a 6.4x multiple of LTM 9/30/11E EBITDA of $38 million.

• The debt financing will include a new $175 million revolving credit facility ($50 million drawn at close) and $40 million of second lien secured subordinated notes, with total leverage of 2.4x. The Sponsor will invest $79 million of new cash equity (inclusive of KAM equity co-invest) and Limited will roll $76 million (combined 63% of the purchase price).

• The transaction was sourced through our strong relationships with the Sponsor, Sycamore Partners, formed by the ex-Golden Gate Capital retail team Stefan Kaluzny and Peter Morrow. KAM previously worked with Stefan and Peter on our investments in J.Jill, Eddie Bauer, and Express.

• Our competitive advantages in this transaction included: – A long history of working with the Sycamore Partners team and their view of KAM as an

excellent partner;

– Deep knowledge of the specialty retail space in particular through our debt and equity

investments in Toys R Us, J.Jill, Eddie Bauer, and Express;

– Our Capstone team, which helped provide important insight and perspective into the carve-out

economics and transition services agreement

– Insight gained from significant market due diligence

Investment Highlights

• Strong Market Position • Strong Sponsor and Operator (Sycamore

Partners formed by ex-Golden Gate Capital retail team)

• High Cash Flow Conversion • Stable Customer Relationships with

Significant Interdependence • Strong and Experienced Management

Team • Conservative Credit Profile


• BSN medical is a leading global medical device company that develops, manufactures and markets wound care, compression therapy and orthopedics products mainly to hospitals, pharmacies and sanitary shops

• Headquartered in Hamburg, BSN medical operates in 35 countries, has eleven production sites and employed 3,995 at the end of 2011

• In 2011 BSN medical generated total sales of €667m and EBITDA of €169m (25.3% margin)

Transaction Update Transaction Overview

KKR Approach

• On June 9, 2012, EQT signed an agreement to acquire BSN Medical, for a total consideration of €1.8 billion from Montagu. The EV of the business represents a 10.3x multiple of LTM EBITDA of €174 million

• The acquisition will be financed with €740 million of funded senior term loans bringing senior leverage to 4.25x and €391.5 million of mezzanine brining leverage through the tranche to 6.5x

• KAM started working on this opportunity in February 2012 with EQT by working alongside them to provide mezzanine to help finance the acquisition

• Following a failed pre-emption attempt by EQT in early March which KAM supported, KAM continued to support the sponsor through out the entire auction that followed which ultimately led to the successful SPA signing in June

• We believe our competitive advantages in this transaction included: – Deep knowledge of the medical device space, having gained significant insights from

previous investments in the sector (Convatec, KCI, DJO)

– Approach of leveraging broader KKR franchise, with insights from the PE team (had

analysed the space in detail) and accessing KKR portfolio companies in our diligence

process (HCA and Boots)*

– Deep market due diligence with industry consultants, vendors, resellers and end-

customers

– Strong relationship with EQT


• Stable, non-cyclical markets with strong resilience in the last downturn

• Broad diversification of sales across products, geographies and channels limits exposure to one-off events or deteriorations of local market conditions

• Strong positions in multiple market segments with access to strong growth geographies and expansion markets

• Market factors provide competitive advantage

• Leading European sponsor • Strong cash flow conversion

*Participation of KKR Private Equity, KKR Capital Markets, and KKR Capstone personnel in the public markets investment process is subject to applicable law and inside information barrier policies and procedures, which may limit the

involvement of such personnel in certain circumstances and KAM’s ability to leverage such integration with KKR. Discussions with Senior Advisors and employees of the Firm’s managed portfolio companies are also subject to the inside

information barrier policies and procedures, which may restrict or limit discussions and/or collaborations with Public Markets/KAM. Alternative Investments

Division

28

MEZZANINE PERFORMANCE

KKR Mezzanine Partners L.P.

Inception to 3/31/2012

(Amounts in millions)

Date of Investment Invested Realized Unrealized Total Gross Gross Multiple of

Original Investment Name Amount1 Value2 Value3 Value4 IRR5 Invested Amount6

July-10 Altegrity Holdings 27.3$ 5.0$ 26.2$ 31.2$ 8.7% 1.14

November-10 RBS WorldPay, Inc. 64.6 7.4 69.8 77.2 14.6% 1.19

December-10 J Jill 34.2 36.4 - 36.4 21.0% 1.06

February-11 IMCD Group BV 53.3 4.0 55.3 59.3 10.3% 1.11

September-11 TelX Group, Inc., The 35.2 2.4 37.8 40.2 29.6% 1.14

October-11 Mast Industries Inc 45.1 2.2 47.3 49.5 25.1% 1.10

October-11 OpenLink International, Inc. 65.6 2.9 66.8 69.7 16.5% 1.06

November-11 Norcell Sweden Holding 2 AB 29.8 9.4 24.7 34.1 46.3% 1.15

January-12 Capital Safety Group 27.2 1.2 27.2 28.3 23.5% 1.04

January-12 Genesys Telecommunications Laboratories Inc.24.2 0.5 25.0 25.4 35.6% 1.05

Total 406.6$ 71.3$ 380.0$ 451.3$ 1.11

Gross Unhedged IRR= 16.1%

FX Hedge Impact= -0.1%

Gross Hedged IRR= 16.0%

Fees & Expenses1= -10.0%

Other Capital Transaction Timing2= -1.2%

Net Hedged IRR= 4.8%

Note: As of March 31, 2012. Please refer to the next slide for important information regarding the investments included on this slide. Fund level IRR will differ from the asset-level IRR as it considers management fees, expenses, accrued carried interest, the timing of capital calls and capital distributions, and the effect of carrying other assets and liabilities, including cash, on the balance sheet. Past performance of any KAM-sponsored fund, vehicle, account or investment referred to therein is not necessarily indicative of future results and there can be no assurance that the investments will perform similarly to those comprising the Investment Experience. 1) Includes inception to date management fee and organizational costs billed or accrued. 2) Timing difference between capital called and capital deployed.

29

MEZZANINE PERFORMANCE (NOTES)

1. Unless otherwise specified, the Invested Amount with respect to each investment represents the equity amount of the original investment therein together with any related follow-on investments made thereafter. Cash flows on which multiple and IRR calculations were based include all such investments as of the date made. 2. Consists of principal and interest payments (including capitalized PIK interest plus accrued but unpaid cash and PIK interest), dividends and proceeds from sales. Prospective investors should note that under the terms of the fund, accrued but unpaid PIK interest would not be deemed realized until actually paid to the Fund. 3. Estimated current value determined in accordance with KAM’s valuation policy as of the applicable date, which provides that (i) quoted market prices in active markets are the best evidence of the fair value of a financial instrument; and (ii) if quoted market prices in active markets are not available, fair value may be estimated using a variety of methods depending on the nature of the instrument and the manner in which it is traded. KAM’s estimate of fair value was undertaken in good faith and was based on the consistent application of a variety of factors, with the objective being to determine the value that would be received upon the sale of the instrument or paid to transfer the instrument in an orderly transaction between market participants at the relevant measurement date. Results include all writedowns and realizations as of 9/30/10. The actual realized returns on unrealized investments will depend on, among other factors, actual default rates, future operating results and cash flows, the ability to make coupon payments when due by the portfolio companies, the value of investments and market conditions at the time of disposition, legal and contractual restrictions on transfer that may limit liquidity, any related transaction costs, the performance of equity securities, the actual amount, cost and other terms of leverage and the timing and manner of disposition of investments, all of which may differ from the assumptions on which the valuations used in the prior performance data contained herein are based. Accordingly, the actual realized return of unrealized investments may differ materially from the returns indicated herein. Prospective investors should note that the performance of the investments shown in the Investment Experience may differ from the performance of such investments reported to investors in the applicable KAM managed funds, vehicles and accounts in which the investments were actually made as a result of the differing procedures and methodologies used to create the Investment Experience, including conventions adopted for consistency of presentation among investments included in the Investment Experience, such as frequency of cash flows for computing Gross IRRs (i.e., monthly vs. annually vs. quarterly), IRR methodology (i.e., time-weighted vs. dollar-weighted) and the effects of currency gains and losses. 4. Computed as sum of Realized Value plus Unrealized Value. 5. “Gross IRR” for purposes hereof shall mean an aggregate, annual, compound, gross internal rate of return on investments. The aggregate Gross IRR for the Investment Experience is a hypothetical Gross IRR given that the investments included therein were not made as part of a single portfolio, but rather by separate funds, vehicles and accounts managed by KAM. Gross IRRs do not reflect management fees, “carried interest,” taxes, transaction costs in connection with the disposition of unrealized investments and other expenses to be borne by investors in the applicable fund, vehicle or account, which will reduce returns and in the aggregate are expected to be substantial; for a description of such fees, carried interest and expenses, see the Original Memorandum including Section X entitled “Summary of Principal Terms” and Part II of Form ADV maintained by KAM, a copy of which will be furnished to each investor prior to its admission to the Fund. 6. Computed as Total Value divided by Invested Amount.

II.4 Special Situations Platform Alternative Investments Division

The Alternative Investments Division of KAM does not claim compliance with GIPS.

SPECIAL SITUATIONS SENIOR INVESTMENT TEAM

31


Diverse Backgrounds

Jamie Weinstein, Co-Head Nat Zilkha, Co-Head Mubashir Mukadam John Reed

• Co-head of Special

Situations Investing; joined

KKR in 2005

• Involved in portfolio

management and credit

analysis for over 100

transactions


experience

• Member of KKR and Co-head

of Special Situations

Investing; joined KKR in

2007

• Director of Harden

Healthcare

• Over 13 years of private

equity and principal debt

investing across numerous

industries at KKR and

previously in Goldman

Sachs’s Principal Investment

Area


• Former Managing Director

focused on European

Distressed at York Capital

and Director within the

Distressed Products Group

at Deutsche Bank


experience


• Former Associate

Director at Bear Stearns &

Co. in Institutional Sales

and Trading


experience





Special Situations Senior Team

(1) Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. Alternative Investments

Division

32

HOW WE DEFINE SPECIAL SITUATIONS INVESTMENTS


Common Characteristics of Special Situations Investments

Catalyst:

Capital Structure or Broader Market Dislocation

Investment Strategies

The Special Situations team invests in opportunities where KKR has an edge

Secondary Distressed

Portfolio Purchases

Rescue Financing / Recapitalization

FOCUS IN ALL STRATEGIES IS ON PROPRIETARY SOURCING AND

INVESTING WHERE KKR HAS AN EDGE

Control-Oriented Opportunities

Expected to be

~50-70%

of Portfolio

Expected to be

~20-30% of Portfolio

Expected to be

~10-20% of Portfolio


European Sovereign Crisis and Bank De-levering

• Bank de-levering and associated derivative effect

• Capital markets volatility

• Lack of liquidity

• Maturity walls

Global Healthcare Funding Crisis

• Lack of government funding

• Reform in healthcare payments

• Market dislocation

Asia Pacific Volatility

• Perception of slower near-term growth

• Contagion of economic slowdown in Europe

• Weaker consumer spending environment in Australia

Energy

• Highly cyclical, capital intensive industry

• Market and commodity volatility

• Non-traditional originated financings and trading opportunities

33

THE MARKET OPPORTUNITY

Theme Investment Thesis Indicative Investments

Through our team’s on-going diligence, we have developed investment theses around market themes and identified distinct Special

Situations investment opportunities

Note: Please refer to “Important Information” on page 1 regarding market views. The above listed companies represent all investments reflecting the corresponding investment thesis detailed above. The specific companies identified are not representative of all of the companies purchased, sold or recommended for KAM clients, and it should not be assumed that the investment in the companies identified was or will be profitable. Actual holdings will vary for each KAM client and there is no guarantee that a particular KAM client’s account will hold any or all of the companies listed.


http://www.hardenhealthcare.com/

34

Background

• The Company is an oil and gas producer focused on unconventional natural gas

• In order to support development in the Horn River Basin, the Company and KKR entered into a JV agreement whereby KKR would purchase an interest in an existing pipeline and commit to fund future new-build midstream assets in the Horn River

• Upon the closing in December 2011, KKR delivered a $255mm equity commitment in a proprietary originated structured investment


• Attractive risk/reward profile

• Take-or-pay contract with no direct volume or price risk, supported by a parent guarantee

• Drilling commitment provides volume protection

• Substantial potential upside to contracted base return

• Potential for additional 3rd party volumes on the pipeline to be brought into the system

• Potential upside from volumes beyond 10-year term, both from continuation of drilling and from the “tail” associated with wells drilled within the 10-year contract period

• Potential platform upsides associated with future projects within the Horn River

QUICKSILVER

Note: Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. Past performance is no guarantee of future results. This example is included solely to illustrate the terms and strategy which has been utilized by the KKR Special Situations team. Past investments by KAM are not indicative of prospective investments that will be made by any KAM fund, vehicle or account or of the future performance thereof.

KKR Edge

Sourcing Edge

Through proprietary relationships developed by the KKR Energy and Infrastructure team, the Company reached out to KKR when looking to find a JV partner for the development of Horn River midstream assets

Diligence Edge

Longstanding experience investing in energy from both

the equity and fixed income standpoints

KAM has been invested in the Company’s capital structure for over three years and was able to evaluate the counterparty risk quickly

KAM Edge

Special Situations platform provides differentiated ability to

provide capital solutions to partners for differentiated

transactions

Solutions Edge

KKR

EDGE


35

EDCON

Background

• The Company is the largest non-food retailer in South Africa,

with a 29.3% market share in the South African clothing &

footwear market, nearly twice that of its nearest competitor

• Bain Capital purchased the Company in April 2007 and KKR

private equity was the runner up in the auction

• Through the secondary public markets KAM began investing in

the Company’s Senior Secured Notes in August 2011


• The Company is larger than its nearest competitor and has

strong brands, good store locations, and is not fashion focused

• Due to the growing middle class of the country, the South

African retail market is attractive over the long term and also

provides a strategic African entry point for international players

• Through the Senior Secured Notes at our cost basis, we are

implicitly valuing the company at attractive levels: 0.3x

attachment point, 4.2x EBITDA multiple, 14% un-levered FCF

yield and ~16% YTM

Note: Please refer to “Important Information” on page 1 for further information on KKR’s inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. Past performance is no guarantee of future results. This example is included solely to illustrate the terms and strategy which has been utilized by the KKR Special Situations team. Past investments by KAM are not indicative of prospective investments that will be made by any KAM fund, vehicle or account or of the future performance thereof.

KKR Edge

Diligence Edge I

KAM leveraged diligence on the company and jurisdiction, and

had intimate knowledge of the company’s business model and

the South African retail market

The KAM team worked with the KKR private equity retail team

to update its due diligence regarding the business and used

contacts established by the private equity team in the South

African market to evaluate the legal and jurisdictional

considerations

Diligence Edge II

KKR

EDGE


SPECIAL SITUATIONS PERFORMANCE REALIZED INVESTMENTS

36

The preceding tables (the “Investment Experience”) comprise a composite of the investments made within the special situations strategy managed by KKR through KAM and its subsidiaries. KKR believes that these investments illustrate its general experience in managing special situations investments. The Investment Experience includes investments held within client accounts having a dedicated allocation to the strategy. While certain client accounts that have participated in the strategy have not been included, for example because of their limited ability to participate in each investment made within the strategy and/or differences in their structure, KKR has determined that investments made within the strategy are represented in the Investment Experience and that the exclusion of such accounts is not material. Such assessment involves significant judgment and may, however, differ from another party’s review of KKR-sponsored portfolios over the same period, which may include comparable investments not represented in the table with lower (or negative) investment returns. Composite or model performance information such as that reflected in the Investment Experience has many inherent limitations and is not indicative of the performance of all investments made by KAM, nor is it fully representative of the performance of all investments that may have been made by the Funds if the Funds had been operating over the period during which the included investments were made. The investments referenced in the Investment Experience were made over a period of time that may not include various market and macroeconomic cycles and the circumstances under which such investments were made may differ significantly from those under which the Funds will make their investments. Furthermore, the investments included in the Investment Experience were not made as part of a single portfolio, but rather by separate, multi-strategy accounts, the investment programs of which, individually or on an overall basis, differ significantly from the Funds’ investment program, including by asset class, investment size, geography, duration, leverage, risk and targeted returns. They should not, therefore, be viewed as representative of investments that will be made by the Funds or the profile of the Funds’ portfolio in general. In particular, it is currently anticipated that the Funds’ portfolio will include a lower concentration of liquid, marketable securities and instruments than is currently represented in KKR’s special situations portfolio (although this cannot be guaranteed). The Funds are the first dedicated vehicles formed by KKR to invest specifically in special situation investments. Prospective investors may contact KKR to discuss the procedures and methodologies used to calculate the Investment Experience and other information provided herein.

Note: As of March 31, 2012. Please refer to slide 32 for important information regarding the investments included on this slide. Past performance of any KAM-sponsored fund, vehicle, account or investment referred to therein is not necessarily indicative of future results and there can be no assurance that the Fund’s investments will perform similarly to those comprising the Investment Experience.

Though the portfolio is in its early stages of development, we are pleased with the initial performance

Inception to 3/31/2012

(Amounts in millions)

Investment Date of Invested Realized Unrealized Total

Name Original Investment Amount1 Value2

Value3

Value4

Realized Investments

iPayment Investors LP March-10 30.2$ 44.7$ -$ 44.7$ 1.48

AerCap Funding I B.V. April-10 24.8 35.2 - 35.2 1.42

McJunkin Corporation August-10 17.9 21.8 - 21.8 1.22

Centro Properties Group_ November-10 15.7 22.3 - 22.3 1.42

Countrywide PLC November-10 10.0 10.6 - 10.6 1.06

CMA Corporation Ltd (CMV AU) March-11 34.2 51.5 - 51.5 1.51

Ally Financial Inc August-11 18.2 22.3 - 22.3 1.23

Nine Entertainment Group Limited September-11 25.3 25.9 - 25.9 1.02

176.3$ 234.3$ -$ 234.3$ 1.33

Gross IRR6: 43.0%

Realized Toehold Investments 76.8$ 79.5$ -$ 79.5$ 1.03

Gross IRR6: 12.5%

Total Realized Investments 253.1$ 313.8$ -$ 313.8$ 1.24

Gross IRR6: 39.2%

Multiple of Gross

Invested Amount5

SPECIAL SITUATIONS PERFORMANCE (CONTINUED) UNREALIZED INVESTMENTS

37 Note: As of March 31, 2012. Please refer to slide 32 for important information regarding the investments included on this slide. Past performance of any KAM-sponsored fund, vehicle, account or investment referred to therein is not necessarily indicative of future results and there can be no assurance that the Fund’s investments will perform similarly to those comprising the Investment Experience.




Value3

Value4

Unrealized Investments

Harden Healthcare March-10 62.2$ 15.0$ 69.6$ 84.6$ 1.36

Eddie Bauer, Inc. April-10 35.1 20.4 19.7 40.1 1.14

Expro July-10 38.1 2.9 41.5 44.4 1.17

Titan Europe PLC/Ireland September-10 37.7 16.0 33.9 49.9 1.32

Avantha Power & Infrastructure Limited September-10 48.2 4.6 49.3 53.9 1.12

General Motors Corp November-10 36.1 1.1 29.9 31.0 0.86

Oriental Trading Company, Inc. January-11 29.2 - 40.1 40.1 1.37

Kaupthing Hf February-11 45.8 - 47.4 47.4 1.03

General Healthcare Group February-11 65.5 3.6 56.4 60.0 0.92

Enterprise plc March-11 32.3 2.0 39.3 41.3 1.28

Edcon Pty Ltd. August-11 44.1 27.0 25.2 52.2 1.18

Bakkavor Finance 2 Plc September-11 21.3 5.8 20.8 26.6 1.25

Infor Global Solutions Intermediate Holdings Limited September-11 30.2 1.3 38.0 39.3 1.30

Centro Properties Group September-11 28.2 5.0 22.8 27.8 0.99

Cemex October-11 30.4 20.0 18.0 38.0 1.25

Masonite Worldwide Holdings November-11 20.5 - 23.1 23.1 1.13

Quinn Group Limited December-11 24.8 - 25.9 25.9 1.04

Fortune Creek Investment Limited December-11 27.2 - 28.6 28.6 1.05

Travelport LLC December-11 21.2 0.8 23.1 23.9 1.13

QMH Limited February-12 24.9 0.6 28.7 29.3 1.18

Brake Bros Ltd. March-12 20.4 - 20.5 20.5 1.00

Eastman Kodak Company March-12 25.5 0.8 25.9 26.7 1.05

New Enterprise Stone & Lime Co., Inc. March-12 17.3 0.1 17.9 18.0 1.04

766.2$ 127.0$ 745.6$ 872.6$ 1.14

Gross IRR6: 16.8%

Unrealized Toehold Investments 25.7$ 1.8$ 29.2$ 31.0$ 1.21

Gross IRR6: 29.3%

Total Unrealized Investments 791.9$ 128.8$ 774.8$ 903.6$ 1.14

Gross IRR6: 17.2%

Grand Total 1,045.0$ 442.6$ 774.8$ 1,217.4$ 1.16

Grand Total, adjusted for Recycled Capital9

602.4$ -$ 774.8$ 774.8$ 1.29

Gross IRR6: 21.6%

Gross Hedged IRR7: 21.9%

Net Hedged IRR8: 15.3%

Multiple of Gross

Invested Amount5

SPECIAL SITUATIONS PERFORMANCE (CONTINUED) TOEHOLD INVESTMENTS

38 Note: As of March 31, 2012. Please refer to slide 32 for important information regarding the investments included on this slide. Past performance of any KAM-sponsored fund, vehicle, account or investment referred to therein is not necessarily indicative of future results and there can be no assurance that the Fund’s investments will perform similarly to those comprising the Investment Experience.




Value3

Value4

Realized Toehold Investments

American Safety Razor Company, LLC August-10 1.0$ 1.1$ -$ 1.1$ 1.10

CAID Holdings II Pty September-10 7.1 6.8 - 6.8 0.96

iStar October-10 0.4 0.4 - 0.4 1.00

Great Atlantic & Pacific Tea Co November-10 5.2 3.0 - 3.0 0.58

Bank Of Ireland November-10 7.1 7.2 - 7.2 1.01

Refresco February-11 3.4 3.7 - 3.7 1.09

Endemol B.V. June-11 1.5 1.3 - 1.3 0.87

Sevan Marine ASA June-11 6.2 5.1 - 5.1 0.82

Education Management August-11 1.0 1.1 - 1.1 1.10

K Hovnanian Enterprises Inc August-11 0.5 0.5 - 0.5 1.00

Nara Cable Funding September-11 7.2 7.9 - 7.9 1.10

Capmark Financial Group Inc. October-11 3.5 4.9 - 4.9 1.40

ConvaTec Healthcare October-11 5.8 6.6 - 6.6 1.14

DFS Furniture Co LTD October-11 3.7 4.1 - 4.1 1.11

Great Atlantic & Pacific Tea Company, Inc., The October-11 3.0 3.1 - 3.1 1.03

GRND 1 October-11 9.4 10.1 - 10.1 1.07

TL Acquisitions, Inc. October-11 0.9 1.2 - 1.2 1.33

Gymboree Corporation, The November-11 2.1 2.5 - 2.5 1.19

Wind Acquisition Finance SA November-11 7.8 8.9 - 8.9 1.14

Total Realized Toehold Investments 76.8$ 79.5$ -$ 79.5$ 1.04

Gross IRR6: 12.5%

Unrealized Toehold Investments

CRC Health Group, Inc. February-10 4.4$ 1.0$ 4.7$ 5.7$ 1.30

Barchester Healthcare Limited February-11 4.7 0.4 3.6 4.0 0.85

ELAN Limited August-11 6.9 0.3 8.2 8.5 1.23

Catalina Marketing Corporation February-12 9.4 - 8.5 8.5 0.90

Petroplus Refining & Marketing Limited February-12 - - 3.9 3.9 -

Arcapita Bank BSC March-12 0.3 - 0.2 0.2 0.67

Total Unrealized Toehold Investments 25.7$ 1.7$ 29.1$ 30.8$ 1.20

Gross IRR6: 29.3%

Multiple of Gross

Invested Amount5

SPECIAL SITUATIONS PERFORMANCE (NOTES)

39

1. Unless otherwise specified, the “Invested Amount” with respect to each investment represents the equity amount of the original investment together with any related follow-on investments made thereafter. Cash flows on which multiple and IRR calculations are based include all such investments as of the date made. The Invested Amount also includes investment transactions for which settlement has not occurred as of March 31, 2012. Non-U.S. dollar investment information is presented using foreign exchange spot rates on the date of settlement of the relevant transaction or, for interest payments and other cash receipts, date of receipt. For investments that have not settled as of March 31, 2012, foreign exchange spot rates on the related trade date are used. For cash interest that is accrued but unpaid, foreign exchange spot rates on the reporting date are used. 2.“Realized Value” consists of principal and interest payments (including accrued but unpaid cash interest), dividends and proceeds from sales. Payment-in-kind interest is treated as realized upon the realization of the principal amount. 3.“Unrealized Value” is estimated current value as of the applicable date. Valuations are determined in accordance with KAM’s valuation policy, which provides that: (i) quoted market prices in active markets are the best evidence of the fair value of a financial instrument; and (ii) if quoted market prices in active markets are not available, fair value may be estimated using a variety of methods depending on the nature of the instrument and the manner in which it is traded. KAM’s estimates of fair value are undertaken in good faith and based on the consistent application of a variety of factors, with the objective being to determine the value that would be received upon the sale of the instrument or paid to transfer the instrument in an orderly transaction between market participants at the relevant measurement date. Results include all write-downs and realizations. The actual realized returns on unrealized investments will depend on, among other factors, actual default rates, future operating results and cash flows, the ability to make coupon payments when due by the portfolio companies, the value of investments and market conditions at the time of disposition, legal and contractual restrictions on transfer that may limit liquidity, any related transaction costs, the performance of equity securities, the actual amount, cost and other terms of leverage and the timing and manner of disposition of investments, all of which may differ from the assumptions on which the valuations used in the prior performance data contained herein are based. Accordingly, the actual realized return of unrealized investments may differ materially from the returns indicated herein. Prospective investors should note that the performance of the investments shown in the Investment Experience may differ from the performance of such investments reported to investors in the applicable accounts in which the investments were actually made as a result of the differing procedures and methodologies used to create the Investment Experience, including conventions adopted for consistency of presentation among investments included in the Investment Experience, such as frequency of cash flows for computing Gross IRRs (i.e., monthly vs. annually vs. quarterly), IRR methodology (i.e., time-weighted vs. dollar-weighted) and the effects of currency gains and losses. 4.“Total Value” is computed as the sum of Realized Value plus Unrealized Value. 5.“Multiple of Gross Invested Amount” is computed as the Total Value divided by the Invested Amount. 6.“Gross IRR” means the aggregate, annual, compound, gross internal rate of return on investments. Internal rates of return are computed on a “dollar-weighted” basis, which takes into account the timing of cash flows, the amounts invested at any given time and unrealized values as of the relevant valuation date. The aggregate Gross IRR for the Investment Experience is a hypothetical Gross IRR given that the investments included therein were not made as part of a single portfolio, but rather by a composite of accounts managed by KAM. Gross IRRs do not reflect management fees, carried interest, taxes, foreign exchange derivative contracts, credit default swap transactions, and transaction costs in connection with the disposition of unrealized investments, organizational expenses and other expenses to be borne by investors in the Funds, which will reduce returns and in the aggregate are expected to be substantial. See Section IX, “Summary of Principal Terms” for more information on such expenses. A general summary of such fees and carried interest is also included in Part 2 of Form ADV maintained by KAM, a copy of which will be furnished upon request. Values shown for non-U.S. dollar investments are derived using foreign and U.S. currency spot rates at the time of valuation. Foreign exchange conversions are embedded within the calculations. In addition, certain positions may include a forward contract as a hedging instrument. Such contracts have been excluded from the relevant position data and, instead, currency hedging is presented at the overall portfolio level. 7.“Gross Hedged IRR” is consistent with the definition of “Gross IRR” above, but is inclusive of foreign exchange derivative contracts and credit default swap transactions. 8.“Net Hedged IRR” is consistent with the definition of Gross Hedged IRR, but is also inclusive of management fees, miscellaneous Fund expenses, including organizational expenses and carried interest. Management fees have been offset by 100% of transaction fees received by KAM or its subsidiaries from portfolio companies. Certain assumptions which KKR believes to be reasonable have been made as to organizational and other Fund expenses. Actual expenses incurred by the Funds may be higher and actual transaction fees may be lower than those reflected in the Investment Experience, which will reduce net returns generated by the Funds. 9.Distributions to Fund investors representing a return of capital, income and gains (“Investment Proceed Distributions”) are recallable during the Funds’ Investment Period. The adjustment for recycled capital reflects a reduction of the total Invested Amount by the amount of Investment Proceed Distributions made, excluding the current ending liquidation date. The adjustment results in a corresponding reduction of the total Realized Value.

III.1 KKR Credit Relative Value

41

KKR CREDIT RELATIVE VALUE


• KKR Credit Relative Value (KCRV) is a new strategy within KAM, offering:

• Clients a new liquid product with a targeted stable return profile

• Provides a product that is not market directional which diversifies KAM’s credit business

• Opportunity to diversify and scale our hedge fund platform

• Allows us to express investment views already being developed by KAM credit and equity analysts

• KCRV will focus on capturing returns from mispriced credit risk and will target relatively low exposure to credit markets which will diversify KAM’s overall credit exposure

• Investible universe will include investment and non-investment grade credit and credit linked instruments, primarily in developed countries

• Trade construction will be driven by fundamental analysis of a company, industry or asset class followed by the development of the optimal way to express the view

• Trades will fall under the following strategies: curve trades, fundamental trades, capital structure arbitrage, basis trades, and index trades

• The strategy is targeted to:

• Utilize fundamental analysis to arrive at primary view

• Incorporate both position and portfolio level hedges

• Be able to provide sufficient liquidity for investors

• Provide stable return profile

42

KKR CREDIT RELATIVE VALUE (cont’d)


• Several of KKR’s competitors have built meaningful businesses in long/short credit and our LP investors are increasingly interested in credit hedge funds as part of their alternatives allocation

• This strategy will also allow KKR to access existing and new LP allocations for more liquid strategies

• After a period of portfolio development and systems testing, we went live with this strategy on July 1st

• Initially, KCRV is funded with $50 million from KKR’s balance sheet. This seed capital will allow KCRV to develop a track record before commencing third-party fundraising in early-2013

• Scott Henkin, formerly a portfolio manager in a similar strategy at DE Shaw, joined the firm earlier this summer to lead KCRV trade and portfolio construction

• Scott is well-integrated with the rest of the KAM strategies and leverages ideas and analysis from both equity and credit analysts

• Credit Relative Value is a scalable long / short credit platform, which we estimate could be $2 billion+ at maturity, with an investment approach that leverages our existing personnel, credit expertise, and infrastructure

Strategy Parameters Expected Level Limit

Long Positions (% of Capital) [3-4%] [7%]

Short Positions (% of Capital) [3%] [5%]

# of Core Investments 20-40 [ TBU ]

Target Gross Returns 10%-15% N/A

Target Volatility <8% [ TBU ]

Industry Concentration [10-15% per industry] [30% per industry]

Geographic Exposure [70-80% North America] [50% International]

Leverage (Long + Short) [1x] [3x]

Net Exposure [+/- 20%] [+/- 50%]

Liquidity Quarterly on 45 days notice; 25% investor level gate if fund redemptions exceed 25% of the fund

III.2 KKR Equity Strategies

44

KKR EQUITY STRATEGIES EXECUTIVE SUMMARY

Established Strategy

• Long / short equity strategy focused on the Americas

• Flexibility to include other equity-oriented investment strategies, and in particular, event-driven and

capital structure arbitrage strategies if attractive risk-adjusted equity returns can be found (max

credit exposure generally below 20%)(1)

• Consistent approach with former investment experience

Experienced Team

• Led by Robert Howard, former Head of Goldman Sachs Principal Strategies (“GSPS”) Americas

• 16 years of financial markets experience, including 11 years of portfolio management expertise

• Continuity of 11-person core investment team that worked together in GSPS Americas

Demonstrated Approach

Enhanced by KKR

Resources

• Investment process driven by fundamental research and a “one-team” collaboration honed over 15

years as part of GSPS

• Top-down, macro-driven overlay complemented by bottom-up, in-depth fundamental analysis

performed on individual companies

• Flexible geographic approach with a primary focus on the U.S. and an ability to make opportunistic

allocations to Canada and Latin America (targeted LatAm exposure: 0–25%)(1)

• Integration with KKR, including access to KKR’s global sourcing and knowledge network(2)

Disciplined Risk

Management

• Disciplined portfolio hedging and rigorous risk management on both the aggregate portfolio and

individual strategy level

• Continuity and integration of previous risk management approach from GSPS into KKR’s existing

risk organization

(1) Information regarding KKR Equity Strategies (“KES”) is provided for discussion purposes only. Therefore, the estimates provided herein, including target allocations, caps, and exposures, are subject to change. There is no assurance that these estimates will be achieved, and actual allocations, caps, exposures, and other estimates may be significantly different than that shown here. (2) Please refer to "Important Information" on page 1 for further information on KKR's inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions.


45

KES INVESTMENT TEAM

Senior members of the KES investment team have 17 years of average industry experience and 10 years average

experience

with GSPS and KKR.

Robert Howard

Head of KES

Trading Investment

Team

Risk

Strategist

Ralph Marron Ami Goldfein Omar Kara Yi Gu

Jason Muenzen Daniel Henriques Antoine Chiche

Atul Joshi Vinesh Motwani

Broader KAM Platform Legal/Compliance Team

50+ Credit Investment Professionals

Established Risk, Operations, and

Technology Infrastructure

Alex Nicolau

Client and Partner Group: John Massad Head of Operations: Ben Dominguez


Public

Markets

Private

Markets

Portfolio

Companies

Operational

Expertise ~30 Senior Advisors

who are current and former

leaders of major global

corporations and public

agencies

~60 KKR Capstone operational

experts focused on diligence

and portfolio company

performance

~150 dedicated

investment

professionals;

$46.0bn AUM(1)

~75 actively

managed

portfolio companies

• ~$210bn of annual

revenues

• ~900,000

employees

~60 dedicated

investment

professionals in

KAM; $16.3bn

AUM(1)

Global Integration

Idea Sharing

Legal/Compliance

WHY KES TEAM CHOSE KKR?

KKR platform complements the KES strategy.

• Ability to keep team

together

• $100mm of KKR capital

• Existing operational

infrastructure

• Global marketing

presence

• Cultural alignment

• Top-tier Wall Street

access

• Enhanced alpha

generation

Retail Energy &

Infrastructure Consumer Products

Industrials Technology Health Care

Financial Services

Media & Telecom

Critical Factors Driving Team’s Decision

46 Note: Please refer to "Important Information" on page 1 for further information on KKR's inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. (1) As of March 31, 2012.


KES PORTFOLIO CONSTRUCTION & RISK MANAGEMENT(1)

• Long / short equities

• Americas

• Opportunistic in credit

• Long / short investment ideas

• Typical gross exposure: ~200% (range: 100–

300%)

• Typical net exposure: ~30% (range: 0–50%)

• Targeted LatAm exposure: 0–25%

• Max credit exposure generally below 20%

• 30–60 total portfolio positions

• 5–8 positions per analyst

• 15–30 “Core”

– Highest conviction trades (~70–80% of GMV)

– Expected core size = 3–7% AUM (long);

2–4% AUM (short)

– 2–5 “Core” per analyst

• 15–30 “Feeder”

– Beginning feeder trades (~20–30% of GMV)

– Expected feeder size = 1–2% AUM

– 2–5 “Feeder” per analyst

• Focus on equity returns with low volatility

• Cap on industry exposure: ~20%

• Re-creation of risk reports, hedging tools,

and screens

• Focus on portfolio diversification

• KKR risk infrastructure

• Use of options and tail hedges

• Emphasis on:

– Gross / net exposures

– Beta-adjusted exposures

– Greeks

– Shock scenarios

– Index “explosion”

– Correlations

– Volatility

– Hedge

structure

– Crowded

trades

– Liquidity

profile

Feeder

Core

Strategy

Portfolio Construction(1) Risk Management

47

(1) Information regarding KKR Equity Strategies (“KES”) is provided for discussion purposes only. Therefore, the estimates provided herein, including target allocations, caps, and exposures, are subject to change. There is no assurance that these estimates will be achieved, and actual allocations, caps, exposures, and other estimates may be significantly different than that shown here.

(2) Prices of securities bought in an initial public offering (“IPO”) may rise and fall rapidly, often because of investor perceptions rather than economic reasons. To the extent a fund is small in size, its IPO investments may have a significant impact on its performance since they may represent a larger portion of the fund’s overall portfolio as compared to the portfolio of a larger fund.

• Position- and portfolio-level hedges

• Focus on liquidity (mid- and large-cap companies)

• Typical volatility: <10%

• Opportunistic in new issues(2)


48

HEDGING PHILOSOPHY

POSITION HEDGES

PORTFOLIO

AGGREGATE POSITIONS

Hedging at the

strategy level

INVESTMENT IDEAS

PORTFOLIO HEDGES

Hedging at the

portfolio level

Seeks to

eliminate

undesired risks

Risks we want

Risks we manage

Risks we don’t want

We proactively size our positions based on various factors including liquidity, risk return, potential loss, quality of the

hedge, and

portfolio diversification.


49

LIFE CYCLE FOR TYPICAL INVESTMENT STRATEGY

MORNING MEETING: DAILY

To review relevant macro and

micro developments

impacting investments and

recap

previous day’s trading prior

to market open

POSITION SIZE

PM / Analysts

work together on

position initiation

Position

write-up

distributed;

becomes

feeder

position

Further diligence or

market dislocation

supports upsizing

position to core

position

Active trading

based on market

moves to seek to

capture profits and

manage risk

Investment thesis

plays out and / or

changes. Position

reduced /

exited over time

Name and

position

monitored for

new catalyst

opportunities

TIME

CONTINUOUS DIALOGUE BETWEEN PM, ANALYSTS, AND BROADER KKR TEAM MEMBERS

Ramp up

Exit

PORTFOLIO REVIEW: MONTHLY

To review and discuss

monthly performance, risk

assessment, portfolio

analytics and dissect sectors

and / or positions driving the

portfolio

INVESTMENT MEETING: WEEKLY

Investment team, KAM senior

management, and risk team

meet to review portfolio

construction, exposures, risk

limits, and R&D

MACRO MEETING: WEEKLY

To discuss relevant macro

takeaways from primary

research, management team

interactions, and events to

debate broader implications

on the portfolio

The entire investment and risk management process is supported by structured and ad-hoc team interaction. The highest

conviction ideas scale up to core positions, and the portfolio represents a mix of core and feeder positions.

Note: Please refer to "Important Information" on page 1 for further information on KKR's inside information barrier policies and procedures, which may limit the involvement of personnel in certain investment processes and discussions. Note: Portfolio manager may use all or some of the techniques described herein or any other techniques that he deems reasonable.


50

INVESTMENT PRINCIPLES

We believe that strong performance...

• Begins with the preservation of capital. Differentiated performance requires

attractive returns with less-than-commensurate risk exposure

• Is built upon the fundamental analysis of situations where our global

resources give us a competitive advantage

• Necessitates constant vigilance of the macro environment in an ever more

interconnected world

• Requires a diversity of views and honesty about what we don’t know

• Means investment decisions are made based on facts and without emotion

• Has, at its foundation, one team with aligned incentives

KES seeks to achieve consistent and attractive returns, with low volatility and limited market correlation.


Documents

Asset Management Overview