KKR & Co. (KKR.US) splashes out $1 billion to acquire sports investment company Arctos, aiming at sports and the secondary market.

According to sources familiar with the matter, KKR & Co. (KKR.US) has agreed to acquire Arctos Partners. The deal values this sports and secondary market investment firm at around $1 billion and will retain the existing management team. Sources revealed that both companies are seeking approval from major professional sports leagues in the United States for the transaction. The deal includes incentive measures for Arctos executives, including co-founder Ian Charles, which could increase the company's valuation to close to $1.5 billion. Sources disclosed that under the agreement, Charles will continue to serve as the company's leader and will receive shares in the acquiring giant based in New York, along with other Arctos executives. They will also retain existing carried interests - the profit splits they receive from investments. The acquisition of Arctos, with assets under management of around $15 billion, allows KKR to establish a foothold in two vibrant areas of the private equity market - sports and secondary market investments. Sources revealed that KKR had also considered acquiring other secondary market investment firms, but ultimately did not make high bids. As of the end of September, KKR managed assets worth $723 billion. Arctos is a pioneer in the sports investment field, holding stakes in NBA's Golden State Warriors and Utah Jazz, as well as MLB's Los Angeles Dodgers and Houston Astros. Additionally, they also hold shares in the NFL's Los Angeles Chargers and NHL's New Jersey Devils. Sources revealed that the approval of the league for the transaction depends on several terms, including verifying if there are conflicts of interest between athletes, such as serving as spokespeople for KKR's subsidiary companies. They stated that KKR will utilize its balance sheet to acquire Arctos, which will become a part of its asset management business.