It is proposed that this filing will become effective (check appropriate box)

 

 

If appropriate, check the following box:

 

 

 

 

 

Check each box that appropriately characterizes the Registrant:

 

 

 

 

 

 

 

 

 

 

The information required to be included in this Registration Statement by Part Required in a Prospectus and Part Required in a Statement of Additional Information of Form is contained in the confidential private placement memorandum (the “Confidential Private Placement Memorandum”) that follows.

 

 

 

KKR US Direct Lending Inc.

 

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

April 30, 2025

 

In making an investment decision, an investor must rely upon its own examination of KKR US Direct Lending Inc. (the Company”) and the terms of the offering, including the merits and risks involved, of the common shares of beneficial interest (the “Shares”) described in this Confidential Private Placement Memorandum. The Shares have not been registered with, or approved or disapproved by, the U.S. Securities and Exchange Commission or any other U.S. federal or state governmental agency or regulatory authority or any national securities exchange. No agency, authority or exchange has passed upon the accuracy or adequacy of this Confidential Private Placement Memorandum or the merits of an investment in the Shares. Further, the Shares are not deposits or obligations of, or guaranteed or endorsed in any way by any bank and are not insured by the U.S. Federal Deposit Insurance Corporation, the U.S. Federal Reserve Board, or any other governmental agency. Any representation to the contrary is a criminal offense.

Shareholders do not have the right to cause the Company to redeem their Shares. No public market for the Shares exists, and the Company contemplates that one will not develop. Consequently, Shareholders may not be able to liquidate their investment. An investment in the Company may not be suitable for investors who may need the money they invest in a specified timeframe.

 

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The Shares have not been and will not be registered under the 1933 Act, or the securities laws of any state. The offering contemplated by this Confidential Private Placement Memorandum is made in reliance upon an exemption from the registration requirements of the 1933 Act for offers and sales of securities that do not involve any public offering, and analogous exemptions under state securities laws. This Confidential Private Placement Memorandum does not constitute an offer to sell or the solicitation of an offer to buy nor will any sale of Shares be made in any jurisdiction in which the offer, solicitation or sale is not authorized or to any person to whom it is unlawful to make the offer, solicitation or sale. No person has been authorized to make any representations concerning the Company that are inconsistent with those contained in this Confidential Private Placement Memorandum. Prospective investors should not rely on any information not contained in this Confidential Private Placement Memorandum. This Confidential Private Placement Memorandum is intended solely for the use of the person to whom it has been delivered for the purpose of evaluating a possible investment by the recipient in the Shares and is not to be reproduced or distributed to any other persons (other than professional advisors of the prospective investor receiving this document). Prospective investors should not construe the contents of this Confidential Private Placement Memorandum as legal, tax or financial advice. Each prospective investor should consult its own professional advisors as to the legal, tax, financial or other matters relevant to the suitability of an investment in the Company for the investor. The Shares are subject to substantial restrictions on transferability and resale and may not be transferred or resold except as permitted under the Company’s Certificate of Incorporation, Bylaws, the 1933 Act and applicable state securities laws, pursuant to registration or exemption from those provisions. Shares of the Company have not been registered for sale outside of the United States. This Confidential Private Placement Memorandum is not intended for distribution to prospective investors outside of the United States. The Company generally does not market or sell shares to investors domiciled outside of the United States, even, with regard to individuals, if they are United States citizens or lawful permanent residents.

 

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The following tables are intended to assist you in understanding the various costs and expenses directly or indirectly associated with investing in our common shares as a percentage of net assets attributable to common shares.

 

 

 

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The Company is a management investment company that continuously offers its Shares. The Company was organized as a Delaware statutory trust on May 2, 2023, and converted into a Delaware corporation on October 13, 2023. The Company’s principal office is located at 555 California Street, 50th Floor, San Francisco, California, 94104, and its telephone number is (415)

The Company invests the net proceeds of the sale of its Shares in accordance with the Company’s investment objective and policies. Pending the investment of the proceeds pursuant to the Company’s investment objective and policies, the Adviser expects that it will initially invest proceeds in temporary investments. The investment of the proceeds pursuant to the Company’s investment objective and policies is expected to be made as appropriate investment opportunities are identified, which is expected to be within three months; however, changes in market conditions could result in the Company’s anticipated investment period extending to as long as six months.

The Company is a specialized investment vehicle that combines many of the features of an investment fund not registered under the 1940 Act, often referred to as a “private investment fund,” with those of a registered investment fund. The Company is similar to a private investment fund in that it will be actively managed and Shares will be sold in private placements solely to Eligible Investors. Unlike many private investment funds, however, the Company, as a registered investment fund, can offer Shares without limiting the number of Eligible Investors that can participate in its investment program. The policy of the Company is not to hold an annual meeting of Shareholders unless a meeting is required to be held under the 1940 Act.

The Company does not have a fixed term. Investors reasonably can expect to receive distributions from the Company periodically after the Company’s investments terminate. The Company will be wound up and dissolved after its final distribution to Shareholders.

 

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The investment program of the Company will be implemented by a team (the “Private Corporate Credit Investment Team”) led by the Global Head of Private Credit, Daniel Pietrzak. KKR’s Private Credit investment philosophy is an important differentiator to how it sources proprietary deals, identifies and underwrites risk and actively manages the portfolio during the life of the assets.

Leveraging the broader KKR network resources, the Private Corporate Credit Investment Team maintains a wide-ranging network of relationships with public and private companies, other investment managers, individual investors, entrepreneurs and financial institutions throughout the world. KKR’s global network of professional relationships includes board members, CEOs and other officers of large companies, advisory institutions and other intermediaries and service providers. The Private Corporate Credit Investment Team adds to these relationships with direct relationships with senior executives in private equity firms, financial advisors, lawyers, turn-around advisors, insolvency practitioners, administrators and other key intermediaries in the debt markets. This network provides access to exclusive investment opportunities, valuable knowledge sources that support the team’s due diligence activities and other significant resources that support the team when negotiating, structuring, consummating and exiting investments. As a result of these relationships, KKR expects to have access to a substantial flow of proprietary investment opportunities from the broader KKR platform. These proprietary sourcing capabilities are further enhanced by KKR’s strong and historic relationship with Wall Street.

KKR’s proprietary origination channels are a key pillar of its differentiated investment process. Its market presence can grant access to proprietary deal flow, where often KKR receives the first call from sponsors who know the types of transactions KKR targets and in which it is likely to invest through its Private Credit platform. Furthermore, the Private Corporate Credit Investment Team has developed strong relationships with a broad network of financial intermediaries including smaller investment and commercial banks.

KKR employs a holistic approach toward origination that is focused on partnering with high quality borrowers and sponsors and serving as a solutions provider for their capital needs. KKR strives to understand the goals of borrowers and to structure appropriate financing solutions that are tailored to meet their specific objectives.

 

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KKR believes this flexibility provides it with a competitive advantage in sourcing and completing investments for its pools of capital, given that it allows it to cast a wide net for originating attractive opportunities and strengthens its relationships with borrowers and sponsors alike. See “Risk Factors—Conflicts of Interest Risk” and “Conflicts of Interest” below.

The Company’s strategies incorporate KKR’s fundamentally driven credit investment philosophy, which is based on deep credit underwriting and rigorous financial analysis. KKR’s investment approach has been designed to take advantage of the experience of KKR and the Private Corporate Credit Investment Team in private equity and credit underwriting and to incorporate valuable characteristics of both processes.

KKR’s Private Corporate Credit Investment Team targets larger businesses operating in defensive sectors, with solid credit fundamentals and high cash flow conversion as KKR believes that this leads to better investment performance prospects through the cycle. These companies are typically market leaders in their field, with strong market positioning. KKR’s underwriting process and approach to portfolio management and monitoring are robust and consistent. The Private Corporate Credit Investment Team is comprised of a team of credit specialists with deep experience investing up and down the capital structure, and across cycles. In addition, through KKR’s culture, KKR can bring the broader resources of the firm into the credit underwriting process.

The type of due diligence and underwriting performed on each investment opportunity by the Private Corporate Credit Investment Team is evaluated on a basis. Common forms of due diligence include, but are not limited to, channel checks (including talking to members of relevant KKR private equity, Capstone, Global Macro and Public Affairs teams), meetings with borrower management and/or sponsors, the review of a company’s historical financials, the review of a quality of earnings report and, if relevant, the review of other third-party reports that could include, but are not limited to, environmental, tax, legal, regulatory and commercial matters. KKR uses external counsel on every transaction to help consider and negotiate structure and documentation, treating each new investment opportunity as a unique opportunity and tailoring the diligence performed accordingly. In addition, there are desk lawyers on the investment team which assist in this process.

All private credit investments are subject to majority approval of the members of the relevant investment committee for the strategy (“Investment Committee” or “IC”).

The Investment Committee generally meets twice per week (or as needed on an ad hoc basis) to discuss new investment opportunities and requires the Private Corporate Credit Investment Team to provide detailed fundamental credit memorandum(s) (each, an “IC Memo”) for each potential investment. Each IC Memo includes a comprehensive stress test with a challenged downside scenario analysis. Potential investments can come to the Investment Committee numerous times depending on their timing, nature and complexity. Each potential investment opportunity will have been screened by at least one Portfolio Manager prior to the production of any IC materials.

Capital preservation is a critical element of KKR’s approach to managing the Company’s credit assets and generating attractive investment returns. Each corporate private credit investment is formally reviewed by KKR’s portfolio management committee (the “Portfolio Management Committee”) in meetings held at least once a quarter. During these meetings, members of the Private Corporate Credit Investment Team will present an updated report on each investment. The Private Corporate Credit Investment Team will be supported by a dedicated Portfolio Monitoring Unit. This unit undertakes detailed periodic monitoring and reporting of credit metrics, which in turn will assist the Private Corporate Credit Investment Team in periodically reviewing and the credit attractiveness of each investment.

 

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Notably, privately originated corporate credit investments often provide an informational advantage over investments in syndicated debt instruments. Given the private, negotiated nature of these investments, lenders are generally able to access borrower performance reporting which, when combined with other negotiated terms in these arrangements, can enable lenders to identify early signs of credit deterioration. KKR’s teams are expected to often have close relationships with the borrower’s management and Private Equity Sponsor teams. These relationships allow KKR to maintain an active dialogue with companies throughout the life of a deal rather than relying solely on periodic financial reporting and information.

This information is summarized and provided to the Portfolio Management Team in real-time in addition to information provided during quarterly Portfolio Management Committee meetings. This rapid sharing of information allows the team to quickly identify any opportunities or issues arising with any underlying borrower.

In addition to acting as a partner to borrowers when making an initial corporate private credit investment, KKR believes it can add significant value to a borrower post-investment as part of its ongoing portfolio management function. For example, KKR has the ability to leverage its resources to help a borrower optimize its entire capital structure and maximize financing efficiency. Furthermore, if an investment shows signs of credit deterioration through adverse operational developments, KKR has the ability to leverage the operational expertise of the team at KKR Capstone to assist the borrower in implementing operational improvements. In addition to the operational capabilities of KKR Capstone, KKR could also leverage the restructuring expertise of its specialist team. KKR believes that its access to such expertise can help to differentiate the Company from other lenders in this market and better protect investments made by the Company.

The Adviser generally integrates sustainability considerations alongside traditional factors in the investment decision-making process that it, in its sole discretion, determines have—or have the potential to have—a substantial impact on an organization’s ability to create or preserve economic value. The Adviser applies proprietary criteria to assess potential financial and reputational risks to issuers. An investment’s sustainability-related risks and opportunities are assessed, monitored and on an ongoing basis. The identification of a risk related to one or more sustainability-related considerations will not necessarily exclude a particular investment that, in the Adviser’s view, is otherwise suitable and attractively priced for investment. The Adviser may utilize data sources provided by third-party vendors and/or engage directly with issuers in assessing sustainability-related risks and opportunities.

While the Adviser may consider sustainability factors when making an investment decision in the same way it considers other business-relevant topics that it considers most significant for maximizing and protecting value, the Company does not pursue a sustainability-based investment strategy or limit its investments to those that meet specific sustainability criteria or standards. Any reference herein to sustainability-related considerations is not intended to qualify the Company’s focus on seeking investments that it believes will generate attractive risk-adjusted returns, and sustainability is not a principal investment strategy of the Company.

The Adviser will assess sustainability-related risks on The likely impacts of sustainability-related risks on the returns of the Company will depend on the Company’s exposure to investments that are vulnerable to sustainability-related risks and the magnitude of the sustainability-related risks. The nature and scope of the Adviser’s sustainability-related diligence, if any, will vary depending on the investment opportunity but may include a review of, among other things, environmental management, social management, sponsor reputation, financial controls, committed management, organizational structure and litigation issues. The negative impacts of sustainability-related risks on the Company may be mitigated by the Adviser’s approach to integrating sustainability-related risks in its investment decision-making. However, there is no guarantee that these measures will mitigate or prevent sustainability-related risks from materializing in respect of the Company.

 

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The likely impact on the returns of the Company from an actual or potential significant decline in the value of an investment due to a sustainability-related event or condition will vary and depend on several factors including, but not limited to, the type, extent, complexity and duration of the event or condition, prevailing market conditions and the existence of any mitigating factors.

The sustainability information used to evaluate sustainability-related risks may be provided by third-party sources and is based on backward-looking analysis. The subjective nature criteria means a wide variety of outcomes are possible. The data may not adequately address significant sustainability factors. The risk analysis is also dependent on companies disclosing relevant data and the availability of this data can be limited. Selecting and evaluating sustainability factors is subjective by nature, and there is no guarantee that the criteria utilized or judgment exercised by our Adviser or a third-party sustainability specialist (if any) will reflect the beliefs, values, internal policies or preferred practices of any particular investor or align with the beliefs or values or preferred practices of other asset managers or with market trends. Further, sustainability considerations are continuously evolving, including from an assessment, regulatory and compliance standpoint, and our Adviser may not accurately or fully anticipate such evolution.

Although we view our sustainable investing approach as a tool for value creation and value protection, different stakeholder groups have divergent views on the merits of integrating sustainability considerations into the investment process. Increasing governmental, investor and societal attention to sustainability-related matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, human capital, labor and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess and report. These factors may alter the environment in which we do business and may increase the ongoing costs of compliance and adversely impact our results of operations and cash flows. If we are unable to adequately address such sustainability-related matters or we fail or are perceived to fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results.

Compliance with any policy or limitation of the Company that is expressed as a percentage of assets is determined at the time of purchase of portfolio securities. The policy will not be violated if these limitations are exceeded because of changes in the market value or investment rating of the Company’s assets or if a Borrower or issuer distributes equity securities incident to the purchase or ownership of a loan or fixed-income instrument or in connection with a reorganization of a Borrower or issuer.

 

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Share Total Return is composed of two elements: the Shares dividends paid by the Company (the amount of which is largely determined by the net investment income of the Company after paying dividends or interest on its leverage) and gains or losses on the value of the securities the Company owns. As required by SEC rules, the table above assumes that the Company is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0% the Company must assume that the interest it receives on its debt security investments is entirely offset by losses in the value of those investments.

 

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An Eligible Investor may be one or more of the following or investors: (1) pension, profit sharing, or other employee benefit trusts that are exempt from taxation under Section 501(a) of the Code, by reason of qualification under Section 401 of the Code; (2) employee benefit plans or other programs established pursuant to Sections 403(b), 408(k) and 457 of the Code; (3) certain deferred compensation plans established by corporations, partnerships, nonprofit entities or state and local governments, or government sponsored programs; (4) certain foundations, endowments and other exempt organizations under Section 501(c) of the Code (other than organizations exempt under Section 501(c)(1)); (5) IRAs (including regular IRAs, spousal IRAs for a non working spouse, Roth IRAs and rollover IRAs) and 403(b)(7) Plans; (6) state colleges and universities and (7) charitable remainder trusts. An Eligible Investor may also be a charitable lead trust. The Company is not intended for U.S. taxable investors and/or persons.

Each prospective investor in the Company is required to certify to the Company that the Shares are being acquired for the account of an “accredited investor” as defined in Regulation D under the 1933 Act (or another category of investor to which offers and sales of securities may be made pursuant to an exemption from the registration provision of the 1933 Act). As stated previously in this Confidential Private Placement Memorandum, investors who are “accredited investors” as defined in Regulation D (or are included in such other category of investor) are referred to in this Confidential Private Placement Memorandum as “Eligible Investors.” Existing Shareholders who purchase additional Shares are required to qualify as Eligible Investors at the time of each additional purchase. Qualifications that must be met in becoming a Shareholder are set out in the subscription agreement that must be completed by each prospective investor.

The minimum initial commitment (“Commitment”) to the Company is $25,000. The minimum initial commitment may be reduced or waived at the discretion of the Adviser.

The Distributor acts as the distributor of Shares for the Company on a best efforts basis, subject to various conditions, pursuant to the terms of the Distribution Agreement. The Distributor is not obligated to sell any specific amount of Shares of the Company. Shares of the Company are continuously offered through the Distributor. The Shares are offered at a price at or greater than NAV per Share, plus any applicable sales charge. The Company and the Distributor have the sole right to accept orders to purchase Shares and reserve the right to reject any order in whole or in part.

No market currently exists for the Shares. The Company does not intend to list its Shares for trading on any securities exchange. There is currently no secondary market for the Shares and the Company does not anticipate that a secondary market will develop for its Shares. NAV per Share is determined as of 4:00 p.m. ET on the last business day of each month and at such other times as the Adviser shall determine. Neither the Adviser nor the Distributor intends to make a market in the Shares.

The Company and the Distributor each reserves the right, in its sole discretion, to accept or reject any order for purchase of Shares. The sale of Shares may be suspended during any period in which the NYSE is closed other than weekends or holidays, or if permitted by the rules of the SEC, when trading on the NYSE is restricted or during an emergency which makes it impracticable for the Company to dispose of its securities or to determine fairly the value of its net assets, or during any other period as permitted by the SEC for the protection of investors.

 

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The Company is company, and as such its Shareholders will not have the right to cause the Company to redeem their Shares. Instead, the Company expects to provide liquidity through periodic tender offers. Shareholders have no rights to redeem or transfer their Shares, other than limited rights of a Shareholder’s descendants or estate to request a repurchase of shares in the event of such Shareholder’s death. Such repurchase may be made, at the Company’s discretion, in a manner consistent with the Company’s periodic repurchases or in such other manner permitted by the Exchange Act, the 1940 Act and the rules thereunder. Documentation for such repurchase request will be required as necessary to confirm the authority of the descendant or estate to make such request on behalf of the deceased Shareholder.

The Company does not currently list or intend to list its Shares for trading on any securities exchange or any other trading market. A secondary market for the Shares likely will not exist. The Company expects to conduct periodic repurchase offers at such times as may be determined by the Board in its sole discretion. The Company expects to set the price of its tender offers using the NAV per Share for each applicable class as of the last day of such tender offer.

However, in any given period, the Adviser may or may not recommend to the Board that the Company conduct a tender offer. For example, if adverse market conditions cause the Company’s investments to become illiquid or trade at depressed prices or if the Adviser believes that conducting a tender offer would impose an undue burden on Shareholders who do not tender compared to the benefits of giving Shareholders the opportunity to sell all or a portion of their Shares at NAV, the Company may choose not to conduct a tender offer. Regardless of the recommendation of the Adviser, the Board may or may not determine to cause the Company to conduct a tender offer for any given period.

There may be periods in which no tender offer is made, and it is possible that no tender offers will be conducted by the Company at all. If a tender offer is not made, Shareholders may not be able to sell their Shares as it is unlikely that a secondary market for the Shares will develop or, if a secondary market does develop, Shareholders may be able to sell their Shares only at substantial discounts from NAV. If the Company does conduct tender offers, it may be required to borrow or sell its more liquid, higher quality portfolio securities to purchase Shares that are tendered, which may increase risks for remaining Shareholders and increase fund expenses as a percent of assets. The Company is designed primarily for long-term investors, and an investment in the Shares should be considered illiquid.

In a tender offer, the Company repurchases outstanding Shares at the NAV per Share on the last day of the offer. Although the Company is not required to sell portfolio investments to fund tender offers, the Company may do so. However, the Company may borrow money to finance the repurchase of Shares pursuant to any tender offers. However, there can be no assurance that the Company will be able to obtain such financing for tender offers if it attempts to do so. Moreover, if the Company’s portfolio does not provide adequate liquidity to fund tender offers in cash, the Company may extend the last day of any tender offer or choose to pay all or a portion of the amounts due by an distribution of securities or by tendering Shareholders with a promissory note, payment on which may be made in cash promptly after the expiration of the tender offer period (as extended). The promissory note will respect to the Shares tendered, the owner of a promissory note will no longer be a Shareholder of the Company and will not have the rights of a Shareholder, including without limitation voting rights. The promissory note may be prepaid, without premium, penalty or notice, at any time. Although tender offers generally would be beneficial to Shareholders by providing them with some ability to sell their Shares at NAV, the acquisition of Shares by the Company will decrease the total assets of the Company. Tender offers are, therefore, likely to increase the Company’s expense

 

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ratio, may result in untimely sales of portfolio securities and/or may limit the Company’s ability to participate in new investment opportunities. To the extent the Company maintains a cash position to satisfy Company repurchases, the Company would not be fully invested, which may reduce the Company’s investment performance. Furthermore, to the extent the Company borrows to finance the making of tender offers by the Company, interest on such borrowings reduces the Company’s net investment income. In order to fund repurchase requests, the Company may sell its more liquid, higher quality portfolio securities to purchase Shares that are tendered, which may increase risks for remaining Shareholders and increase fund expenses. Consummating a tender offer may require the Company to liquidate portfolio securities, and realize gains or losses, at a time when the Adviser would otherwise consider it disadvantageous to do so.

It is the Board’s policy, which may be changed by the Board, not to purchase Shares pursuant to a tender offer if (1) such purchases would impair the Company’s status as a regulated investment company; (2) the Company would not be able to liquidate portfolio securities in a manner that is orderly and consistent with the Company’s investment objective and policies in order to purchase Shares tendered pursuant to the tender offer; or (3) there is, in the Board’s judgment, any (a) legal action or proceeding instituted or threatened challenging the tender offer or otherwise materially adversely affecting the Company, (b) declaration of a banking moratorium by Federal or state authorities or any suspension of payment by banks in the United States or New York State, which is material to the Company, (c) limitation imposed by Federal or state authorities on the extension of credit by lending institutions, (d) commencement or escalation of war, armed hostilities, acts of terrorism, natural disasters, public health crises or other international or national calamity directly or indirectly involving the United States that in the sole determination of the Board is material to the Company, (e) a material increase or decrease in the estimated NAV of the Company from the estimated NAV of the Company as of the commencement of the tender offer or (f) other events or conditions that would have a material adverse effect on the Company or its Shareholders if Shares tendered pursuant to the tender offer were purchased. Thus, there can be no assurance that the Board will proceed with any tender offer. The Board may modify these conditions in light of circumstances existing at the time. The Company may not purchase Shares to the extent such purchases would result in the asset coverage with respect to any borrowing being reduced below the asset coverage requirement set forth in the 1940 Act. Accordingly, in order to purchase all Shares tendered, the Company may have to repay all or part of any then outstanding borrowing to maintain the required asset coverage. In addition, the amount of Shares for which the Company makes any particular repurchase offer may be limited for the reasons set forth above or in respect of other concerns related to the Company’s portfolio or the impact of the tender offer on those Shareholders who do not sell their Shares in the tender offer.

Each tender offer would be made and Shareholders would be notified in accordance with the requirements of the Exchange Act and the 1940 Act, either by publication or mailing or both. The tender offer documents will contain information prescribed by such laws and the rules and regulations promulgated thereunder. The repurchase of tendered Shares by the Company is a taxable event to Shareholders.

See “Tax Considerations.” Selected securities dealers or other financial intermediaries may charge a processing fee to confirm a repurchase of Shares pursuant to a tender offer.

The Company will assume all fees and expenses related to a repurchase of Shares. If a Shareholder tenders a number of Shares that would cause the aggregate NAV of the Shareholder’s holdings to fall below the required minimum, the Company reserves the right to reduce the amount to be repurchased from the Shareholder so that the required minimum balance is maintained. The Company may also repurchase all of such a Shareholder’s Shares.

The Company’s NAV per share may change materially from the date a tender offer is mailed to the tender valuation date (or any later valuation date if the tender offer is extended), and to the effective date of repurchase, and it also may change materially shortly after a tender is completed. The method by which the Company calculates its NAV is discussed under the caption “Net Asset Value.”

 

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The Company may redeem Shares without consent or other action by the Shareholder or other person if the Company determines that:

 

 

 

 

 

Shares are redeemed at the NAV per Share. Mandatory redemptions will be conducted consistent with Rule under the 1940 Act and in accordance with other applicable federal securities laws, including the 1940 Act and the rules thereunder.

 

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NAV per Share is determined as of 4:00 p.m. ET on the last business day of each month and at such other times as the Adviser shall determine. The Company calculates NAV per Share by subtracting liabilities from the total assets of the Company and dividing the result by the total number of outstanding Shares. The Company’s assets and liabilities are valued in accordance with the principles set forth herein.

For purposes of calculating NAV, portfolio securities and other assets for which market quotes are readily available are valued at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers or pricing services. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost. Securities and other assets for which market quotes are not readily available are valued at fair value using good faith methods. The Board has designated the Adviser as the Company’s valuation designee pursuant to Rule under the 1940 Act to perform fair valuation determinations for the Company with respect to all Company investments and/or other assets. In circumstances where market quotes are not readily available, securities may not be priced on the basis of quotes from the primary market in which they are traded, but rather may be valued at fair value, as determined in good faith, pursuant to procedures adopted by the Board. Fair value pricing may require subjective determinations about the value of a security.

Domestic and foreign fixed-income instruments and traded derivatives are normally valued on the basis of quotes obtained from brokers and dealers or pricing services using data reflecting the earlier closing of the principal markets for those securities. Bank loans, including Senior Loans, are valued by using readily available market quotations or another commercially reasonable method selected by an independent, third-party pricing services, or, if such independent, third-party valuations are not available, by using broker quotations. Senior secured adjustable, variable or floating rate loans for which an active secondary market exists to a reliable degree will be valued at the mid price in the market for such loans, as provided by a loan pricing service. Directly originated loans are valued on an individual loan level. In doing so, the Adviser may engage an independent, third-party valuation agent, and fair valuation of such loans will be performed using inputs that incorporate borrower level data, including significant events affecting the issuer or collateral and market developments. Prices obtained from independent pricing services use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics. Exchange traded options, futures and options on futures are valued at the settlement price determined by the relevant exchange. The value of swaps, including credit default swaps, total return swaps and interest rate swaps will be determined by obtaining at least one dealer quotation (including information from counterparties) or valuations from third-party pricing services. If no quotations or valuations are available, or if such quotations or valuations are believed to be unreliable, swaps will be fair valued pursuant to procedures adopted by the Board.

The Company normally uses pricing data for domestic or foreign equity securities received shortly after the close of the primary securities exchange on which such securities trade and does not normally take into account trading, clearances or settlements that take place after the close of the exchange.

If events materially affecting the price of foreign portfolio securities occur between the time when their price was last determined on such foreign securities exchange or market and the time when the Company’s NAV was last calculated (for example, movements in certain U.S. securities indices which demonstrate strong correlation to movements in certain foreign securities markets), such securities may be valued at their fair value as determined in good faith in accordance with procedures adopted by the Board. For purposes of calculating NAV, all assets and liabilities initially expressed in foreign currencies will be converted into U.S. dollars at prevailing exchange rates as may be determined in good faith pursuant to procedures adopted by the Board. Although the Company’s policy is intended to result in a calculation of the Company’s NAV that fairly reflects security values as of the time of pricing, the Company cannot ensure that fair values would accurately reflect the price that the Company could obtain for a security if it were to dispose of that security as of the time of pricing (for instances, in a forced or distressed sale). The prices used by the Company may differ from the value that would be realized if the securities were sold.

 

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Dividends on the Shares in amounts representing substantially all of the net investment income, if any, earned each year are generally paid at least annually at the Company’s discretion. Payments will vary in amount, depending on investment income received and expenses of operation. There can be no assurance the Company will have substantial income or pay dividends. The Company is not a suitable investment for any investor who requires regular dividend income.

If the Company failed to qualify as a RIC for U.S. federal income tax purposes or failed to satisfy the 90% distribution requirement in any taxable year, the Company would be subject to U.S. federal income tax at regular corporate rates on its taxable income, including its net capital gain, even if such income were distributed to its Shareholders, and all distributions out of earnings and profits would be taxed to Shareholders as ordinary dividend income. Requalifying as a RIC could subject the Company to significant tax costs.

The Company intends to pay dividends representing substantially all of the net capital gains, if any, it earns each year at least annually.

The U.S. federal income tax treatment and characterization of the Company’s distributions may vary significantly from time to time because of the varied nature of the Company’s investments. In light of the Company’s investment policies, the Company anticipates that the 1940 Act will require it to accompany each distribution with a statement setting forth the estimated source (as between net income, capital gains and return of capital) of the distribution made. The Company will indicate the proportion of its capital gains distributions that constitute long-term and short-term gains annually. The ultimate U.S. federal income tax characterization of the Company’s distributions made in a calendar or fiscal year cannot finally be determined until after the end of that taxable year. As a result, there is a possibility that the Company may make total distributions during a calendar or taxable year in an amount that exceeds the Company’s net investment company taxable income and net capital gains for the relevant taxable year. In such situations, if a distribution exceeds the Company’s current and accumulated earnings and profits (as determined for U.S. federal income tax purposes), such distribution would generally be treated as a return of capital reducing the amount of a Shareholder’s tax basis in such Shareholder’s Shares.

Section 19(b) of the 1940 Act and Rule thereunder generally limit the Company to one long-term capital gain distribution per year, subject to certain exceptions.

 

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The Adviser will experience conflicts of interest in connection with the management of the Company, including, but not limited to, those discussed below. Dealing with conflicts of interest is complex and difficult, and new and different types of conflicts may subsequently arise.

 

 

 

 

 

 

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Each of the Adviser and the other investment advisers and/or investment managers affiliated with KKR will deal with conflicts of interest using its best judgment, but in its sole discretion. When conflicts arise between the Company and another affiliated fund, the Adviser will represent the interests of the Company and the other participating affiliated adviser will represent the interests of the affiliated fund it sponsors, manages or advises. In resolving conflicts, the Adviser and the other affiliated advisers will consider various factors, including applicable restrictions under the 1940 Act, the interests of the funds and accounts they advise in the context of both the immediate issue at hand and the longer term course of dealing among the Company and the other affiliated fund. As with all conflicts involving the Company, the Adviser’s determination as to which factors are relevant and the resolution of such conflicts will be made in the Adviser’s sole discretion except as required by the 1940 Act or by the governing documents of the Company. Although the Adviser has established procedures and policies addressing conflicts of interest, there can be no assurance that the Adviser will be able to resolve all conflicts in a manner that is favorable to the Company.

 

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The following are fundamental investment restrictions of the Company and may not be changed without the approval of the holders of a majority of the Company’s outstanding voting securities (which for this purpose and under the 1940 Act, means the lesser of (i) 67% or more of the Company’s voting securities present at a meeting at which more than 50% of the Company’s outstanding voting securities are present or represented by proxy or (ii) more than 50% of the Company’s outstanding voting securities). Except as otherwise noted, all percentage limitations set forth below apply immediately after a purchase and any subsequent change in any applicable percentage resulting from market fluctuations does not require any action. With respect to the limitations on the issuance of senior securities and in the case of borrowings, the percentage limitations apply at the time of issuance and on an ongoing basis. The Company’s fundamental policies are as follows:

 

 

 

 

 

 

 

The following are interpretations of the fundamental investment policies of the Company and may be revised without approval of the Company’s Shareholders, consistent with current laws and regulations as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time:

. Under current law as interpreted by the SEC and its staff, the Company may borrow from: (a) a bank, provided that immediately after such borrowing there is an asset coverage of 300% for all borrowings of the Company; or (b) a bank or other persons for temporary purposes only, provided that such temporary borrowings are in an amount not exceeding 5% of the Company’s total assets at the time when the borrowing is made. This limitation does not preclude the Company from entering into reverse repurchase transactions, provided that the Company has an asset coverage of 300% for all borrowings and repurchase commitments of the Company pursuant to reverse repurchase transactions.

. Senior securities may include any obligation or instrument issued by an investment company evidencing indebtedness. The Company’s limitation with respect to issuing senior securities is not applicable to activities that may be deemed to involve the issuance or sale of a senior security by the Company, provided that the Company’s engagement in such activities is consistent with or permitted by the 1940 Act, the rules and regulations promulgated thereunder or interpretations of the SEC or its staff.

 

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. Under the 1940 Act, underwriting securities generally involves an investment company purchasing securities directly from an issuer for the purpose of selling (distributing) them or participating in any such activity either directly or indirectly. The Company’s limitation with respect to underwriting securities is not applicable to the extent that, in connection with the disposition of portfolio securities (including restricted securities), the Company may be deemed an underwriter under certain federal securities laws.

. Under current SEC and SEC staff interpretation, the Company would “concentrate” its investments if more than 25% of the Company’s total assets would be invested in securities of issuers conducting their principal business activities in the same industry. For purposes of this limitation, there is no limit on: (1) investments in securities issued or guaranteed by the U.S. government and its agencies and instrumentalities or securities of state and municipal governments or their political subdivisions, in repurchase agreements collateralized by U.S. Government securities, or in securities issued by the states, territories, or possessions of the United States (“municipal securities”), excluding private activity municipal securities whose principal and interest payments are derived principally from the assets and revenues of a entity (which will be subject to restriction 4); or (2) investments in issuers domiciled in a single jurisdiction provided that the Company does not invest greater than 25% in a particular industry. Notwithstanding anything to the contrary, to the extent permitted by the 1940 Act, the Company may invest in one or more investment companies; provided that, except to the extent the Company invests in other investment companies pursuant to Section 12(d)(1)(A) or (F) of the 1940 Act, the Company treats the assets of the investment companies in which it invests as its own for purposes of this policy.

. The 1940 Act does not directly restrict an investment company’s ability to invest in real estate but does require that every investment company have a fundamental investment policy governing such investments. The Company’s limitation with respect to investing in real estate is not applicable to investments in securities or mortgages or loans that are secured by or represent interests in real estate. This limitation does not preclude the Company from purchasing or selling mortgage-related securities or securities of companies engaged in the real estate business or that have a significant portion of their assets in real estate (including real estate investment trusts).

. The 1940 Act does not directly restrict an investment company’s ability to invest in commodities but does require that every investment company have a fundamental investment policy governing such investments. The Company may hold commodities acquired as a result of ownership of securities or other investments. This limitation does not preclude the Company from purchasing or selling options or futures contracts, from investing in securities or other instruments backed by commodities or from investing in companies that are engaged in a commodities business or have a significant portion of their assets in commodities.

. Under current law as interpreted by the SEC and its staff, the Company may not lend any security or make any other loan if, as a result, more than 33 1/3% of its total assets would be lent to other parties (this restriction does not apply to purchases of debt securities or repurchase agreements). Subject to this limitation, the Company may make loans, for example: (a) by loaning portfolio securities; (b) by engaging in repurchase agreements; (c) by making loans secured by real estate; (d) by making loans to affiliated funds as permitted by the SEC; or (e) by purchasing offered debt securities. For purposes of this limitation, the term “loans” shall not include the purchase of a portion of an issue of publicly distributed bonds, debentures or other securities.

Portions of the Company’s fundamental investment restrictions (i.e., the references to “except to the extent permitted under the 1940 Act, as such may be interpreted or modified by regulatory authorities having jurisdiction, from time to time”) provide the Company with flexibility to change its limitations in connection with changes in applicable law, rules, regulations or exemptive relief. The language used in these restrictions provides the necessary flexibility to allow the Board to respond efficiently to these kinds of developments without the delay and expense of a Shareholder meeting.

 

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The Company’s investment objective and investment strategies are not fundamental and may be changed by the Board without Shareholder approval. The Company will provide Shareholders with at least 60 days’ notice prior to changing the policy to invest, under normal circumstances, 80% of its net assets (plus the amount of its borrowings for investment purposes) in a portfolio of loans to companies having their principal place of business in the United States.

 

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Below is a list of the Company’s Directors and their present positions and principal occupations during the past five years. Directors who are not deemed to be “interested persons” of the Company as defined in the 1940 Act are referred to as “Independent Directors.” Directors who are deemed to be “interested persons” of the Company are referred to as “Interested Directors.” The term “Fund Complex” includes the registered investment companies advised by the Adviser or its affiliates as of the date of this Confidential Private Placement Memorandum.

 

 

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The Board has concluded, based on experience, qualifications and attributes, that the Director should serve as a Director. Following is a brief summary of the information that led to and/or supports this conclusion.

, an Interested Director, joined KKR Credit Advisors (US) LLC in 2006 and is a Managing Director of KKR, Chief Operating Officer of KKR Private Credit, and Operating Officer of FS KKR Capital Corp (“FSK”). Mr. Wilson served as Corporate Capital Trust’s Chief Operating Officer prior to its merger with FS KKR Capital Corp. and has held various senior roles across KKR Credit Advisors (US) LLC. Prior to KKR, Mr. Wilson was with PricewaterhouseCoopers, serving a variety of clients across industries. Mr. Wilson holds a B.A. in Economics with honors from Wilfrid Laurier University and a MAcc in Accounting from the University of Waterloo. He also is a CFA Charterholder, Chartered Professional Accountant and a Chartered Accountant.

, an Independent Director, is an independent trustee on the board of directors of the KKR Income Opportunities Fund (“KIO”) and KKR Credit Opportunities Portfolio (“KCOP”). She has served on the board of trustees or directors, as applicable, of KKR Asset-Based Income Fund (“ABIF”) and KKR Enhanced US Direct Lending Inc since 2023 and 2024, respectively. She is a Board Member of FlexPaths LLC, a workplace strategy and consulting firm. She is Treasurer and a Board Member of Conversations, a organization promoting dialogue on climate change and energy. Previously, Ms. Sidamon-Eristoff was a Managing Director of Constellation Wealth Advisors from 2007 until its sale in 2015 to First Republic Bank. She started her career in 1987 at Morgan Stanley, spending most of it in Private Wealth Management, first as a fixed income portfolio manager, then as a Managing Director and head of the New York and other offices. She retired in 2005 as an Advisory Director. Ms. Sidamon-Eristoff has served on the boards of numerous organizations in New York and New Jersey. She holds a B.A. in Political Science from Duke University and an M.B.A. from the Fuqua School of Business at Duke University.

, an Independent Director, has served on the board of directors for FSK since 2018, served on the board of trustees for KKR FS Income Trust and KKR FS Income Trust Select since 2022 and 2023, respectively, served as an independent director of Corporate Capital Trust, Inc. (“CCT”) from 2011 until the merger of FSK and CCT in 2018, and served as an independent trustee for Corporate Capital Trust II from 2015 until its merger with FS KKR Capital Corp. II (“FSKR”) in 2019. Mr. Kropp has served as lead independent director of KKR Real Estate Select Trust since its founding in 2021. He has served on the board of trustees of ABIF since 2023 and on the board of directors of KKR Enhanced US Direct Lending Inc. since 2024. Mr. Kropp previously served as chief investment officer of SLKW Investments LLC, a position he held from 2009 until his retirement in 2019 and was chief financial officer of Microproperties LLC from 2012 to 2019. From 1998 to 2021, Mr. Kropp was a director, chair of the Compensation committee, and a member of the Nominating/Corporate Governance committee of PS Business Parks, Inc., a public real estate investment trust whose shares were listed on the New York Stock Exchange (“NYSE”), until its acquisition. Mr. Kropp became an independent trustee of NYSE-listed American Homes 4 Rent and chairman of its audit committee at its founding in November 2012. Mr. Kropp has served as lead independent director of KKR Real Estate Select Trust since its founding in 2021. Mr. Kropp was also a member of the board of directors of FSKR until the merger. Mr. Kropp received a B.B.A. Finance from St. Francis College and completed the MBA/CPA preparation

 

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program from New York University. Mr. Kropp has, in the past, been licensed to serve in a variety of supervisory positions (including financial, options and compliance principal) by the National Association of Securities Dealers. He is a member of the American Institute of CPAs and a Board Leadership Fellow for the National Association of Corporate Directors.

, an Independent Director, has served on the board of directors for FSK since 2019, served on the board of trustees for KKR FS Income Trust and KKR FS Income Trust Select since 2022 and 2023, respectively, and is the founder and has served as the chief executive officer of Echo Juliette, a consultant and adviser on workplace investments spanning executive coaching, employee productivity and physical space, since January 2019. She has served on the board of trustees of ABIF since 2023. Prior to founding Echo Juliette, Ms. Sandler served as managing director of The Blackstone Group and Chief Operating Officer of its Blackstone Real Estate Debt Strategies business from September 2016 to August 2018. Prior to joining The Blackstone Group, she worked at Deutsche Bank from November 2000 to August 2016, including serving at different times as a managing director and global chief operating officer of the Risk Division, Structure Finance business and Commercial Real Estate business, among other roles. Prior to joining Deutsche Bank, she worked at a number of companies in the financial services industry. Ms. Sandler was also a member of the board of directors of FSKR until the merger with Corporate Capital Trust II. Ms. Sandler received a B.A. from Duke University and an M.B.A. from The Wharton School of the University of Pennsylvania.

The following table shows the dollar range of equity securities beneficially owned by the Directors in the Company and the Fund Complex as of December 31, 2024.

 

 

The Company’s Independent Directors will be compensated by an annual retainer. The following is the compensation paid to the Directors for the fiscal year ended December 31, 2024.

 

 

 

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The Board met four times during the fiscal year ended December 31, 2024.

In addition to serving on the Board, the Independent Directors also serve on the following committees, which have been established by the Board to handle certain designated responsibilities. The Board has designated a chair of each committee. The Board may establish additional committees, change the membership of any committee, fill all vacancies and designate alternate members to replace any absent or disqualified member of any committee or to dissolve any committee as it deems necessary and in the Company’s best interest.

 The members of the Company’s Audit Committee (the “Audit Committee”) are Catherine B. Sidamon-Eristoff, James H. Kropp and Elizabeth J. Sandler, each of whom meets the independence standards established by the SEC for audit committees and is independent for purposes of the 1940 Act. James H. Kropp serves as chair of the Audit Committee. The Board has determined that Mr. Kropp is an “audit committee financial expert” as that term is defined under Item 407 the Exchange Act. The Audit Committee operates pursuant to a written charter and meets periodically as necessary. The Audit Committee is responsible for selecting, engaging and discharging the Company’s independent registered public accounting firm, reviewing the plans, scope and results of the audit engagement with the Company’s independent registered public accounting firm, approving professional services provided by the Company’s independent registered public accounting firm (including compensation therefor), reviewing the independence of the Company’s independent registered public accounting firm and reviewing the adequacy of the Company’s internal controls over financial reporting. No member of the Audit Committee is an “interested person” of the Company.

The Audit Committee met three times during the fiscal year ended December 31, 2024.

 The members of the Company’s Nominating Committee (the “Nominating Committee”) are Catherine B. Sidamon-Eristoff, James H. Kropp and Elizabeth J. Sandler, each of whom meets the independence standards established by the SEC for governance committees and is independent for purposes of the 1940 Act. Elizabeth J. Sandler serves as chair of the Nominating Committee. The Nominating Committee operates pursuant to a written charter and meets periodically as necessary. The Nominating Committee is responsible for selecting, researching, and nominating directors for election by Shareholders, periodically reviewing the composition of the Board in light of the current needs of the Board and the Company, and determining whether it may be appropriate to add or remove individuals after considering issues of judgment, diversity, age, skills, background and experience. The Nominating Committee will consider proposed nominations for directors by Shareholders who have sent nominations (which include the biographical information and the qualifications of the proposed nominee) to President of the Company, as the Nominating Committee deems appropriate. No member of the Nominating Committee is an “interested person” of the Company.

The Nominating Committee did not meet during the fiscal year ended December 31, 2024.

The Board is currently composed of four Directors, three of whom are Independent Directors. The Company’s business and affairs are managed under the direction of its Board. Among other things, the Board sets broad policies for the Company and approves the appointment of the Company’s Administrator and officers. The role of the Board, and of any individual Director, is one of oversight and not of management of the

Under the Company’s Bylaws, the Board may designate one of the Directors as chair to preside over meetings of the Board and meetings of Shareholders, and to perform such other duties as may be assigned to him or her by the Board. Presently, Ryan L.G. Wilson serves as Chair of the Board and is an Interested Director by virtue of his employment relationship with an affiliate of the Adviser. The Board believes that it is in the best interests of the Company and its Shareholders for Mr. Wilson to serve as Chair of the Board because of his significant

 

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experience in matters of relevance to the Company’s business. James H. Kropp presently serves as the lead Independent Director, which the Board believes is an appropriate means to seek to address any potential conflicts of interest that may arise from the Chair’s status as an Interested Director. The Board believes that flexibility to determine its Chair and to recognize its leadership structure is in the best interests of the Company and its Shareholders at this time.

All of the Independent Directors play an active role on the Board. The Independent Directors compose a majority of the Board and will be closely involved in all material deliberations related to the Company. The Board believes that, with these practices, each Independent Director has an equal involvement in the actions and oversight role of the Board and equal accountability to the Company and its Shareholders. The Independent Directors are expected to meet separately (i) as part of each regular Board meeting and (ii) with the Company’s Chief Compliance Officer, as part of at least one Board meeting each year.

The Board believes that its leadership structure is the optimal structure for the Company at this time. The Board, which will review its leadership structure periodically as part of its annual self-assessment process, further believes that its structure is presently appropriate to enable it to exercise its oversight of the Company.

The Directors meet periodically throughout the year to discuss and consider matters concerning the Company and to oversee the Company’s activities, including its investment performance, compliance program and risks associated with its activities. Risk management is a broad concept comprising many disparate elements (for example, investment risk, issuer and counterparty risk, compliance risk, operational risk and business continuity risk). The Board implements its risk oversight function both as a whole and through its committees. The Board has adopted, and periodically reviews, policies and procedures designed to address risks associated with the Company’s activities. In the course of providing oversight, the Board and its committees will receive reports on the Company’s and the Adviser’s activities, including reports regarding the Company’s investment portfolio and financial accounting and reporting. The Board also receives a quarterly report from the Company’s chief compliance officer, who reports on the Company’s compliance with the federal and state securities laws and its internal compliance policies and procedures as well as those of the Adviser, and the Company’s Administrator. The Audit Committee’s meetings with the Company’s independent registered public accounting firm also contribute to its oversight of certain internal control risks. In addition, the Board meets periodically with the Adviser to receive reports regarding the Company’s operations, including reports on certain investment and operational risks, and the Independent Directors are encouraged to communicate directly with senior members of Company management.

The Board believes that this role in risk oversight is appropriate. The Board believes that the Company has robust internal processes in place and a strong internal control environment to identify and manage risks. However, not all risks that may affect the Company can be identified or processes and controls developed to eliminate or mitigate their occurrence or effects, and some risks are beyond the control of the Company, the Adviser and the Company’s other service providers.

KKR Credit Advisors (US) LLC serves as the Adviser, subject to the ultimate oversight of, and any policies established by, the Board, pursuant to the terms of an investment advisory agreement with the Company. Pursuant to the investment advisory agreement, the Adviser manages the Company’s investment portfolio, directs purchases and sales of portfolio securities and reports thereon to the Company’s officers and directors regularly. The Adviser or its parent also provides the office space, facilities, equipment and personnel necessary to perform the following services for the Company: SEC compliance, including record keeping, reporting requirements and registration statements and proxies; supervision of Company operations, including coordination of functions of the transfer agent, custodian, accountants, counsel and other parties performing services or

 

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operational functions for the Company; and certain administrative and clerical services, including certain accounting services and maintenance of certain books and records.

Launched in 2004, the Adviser is a subsidiary of KKR & Co. Inc., a leading global investment firm with an over history of leadership, innovation and investment excellence. The Adviser is a leading manager of grade debt and public equities. The Adviser was formed as a limited liability company under the laws of the State of Delaware on June 24, 2004 and is a registered investment adviser under the 1940 Act. The Adviser currently serves as an investment adviser of certain unregistered private investment companies and registered investment companies and may in the future serve as an investment adviser of other registered and unregistered investment companies. The Adviser is located at 555 California Street, 50th Floor, San Francisco, CA 94104, and its telephone number is (415)

KKR operates with a single culture that rewards investment discipline, creativity, determination and patience and the sharing of information, resources, expertise and best practices across offices and asset classes, subject to well-defined information sharing policies and compliance procedures. Its investment professionals provide access to an established platform for evaluating investments, managing risk and focusing on opportunities that seek to generate attractive returns with appropriate levels of risk. This platform allows for intensive due diligence to filter investment opportunities and help select investments that offer the most favorable risk/reward characteristics. Because KKR believes that deep industry knowledge is integral to sourcing deals and creating value for investors, KKR’s investment professionals are organized in industry and/or sector-specific teams. These teams conduct their own primary research, develop views on industry/sector themes and trends and proactively work to identify opportunities in which to invest, often on an exclusive basis. KKR believes this approach allows investment teams to become experts within their sectors and build strong relationships with borrowers or originators needing capital.

Founded in 1976, KKR is a leading global investment firm with approximately 4,834 people, including approximately 941 investment professionals. It operates an integrated global platform for sourcing and executing investments across multiple industries, asset classes and geographies. KKR is a long-term fundamental investor focused on producing attractive risk-adjusted returns for its clients. As of December 31, 2024, KKR had approximately $638 billion in AUM.

The Company is positioned, under the management of the Adviser, to take advantage of the full resources of KKR’s global network. With over 480 employees in its business, including approximately 170 dedicated investment professionals, the Adviser’s investment teams seek to leverage KKR’s private equity experience and extensive industry relationships in making strong investment choices on behalf of its clients. The investment professional of the Adviser who has primary responsibility for management and oversight of the Company is Daniel Pietrzak.

(New York) joined KKR in 2016 and is a Partner and serves as the Global Head of Private Credit and a portfolio manager for KKR’s private credit funds and portfolios. Mr. Pietrzak is Chief Investment Officer of the KKR / FS Investments joint venture and and Chief Investment Officer for FS KKR Capital Corp. (FSK), which trades on the NYSE. He also serves on the board of directors of FSK and several KKR Credit portfolio companies, including Oodle Car Finance, Pepper and Toorak Capital Partners. Prior to joining KKR, Mr. Pietrzak was a managing director and the of Deutsche Bank’s structured finance business across the Americas and Europe. Previously, Mr. Pietrzak held various roles in the credit businesses of Societe Generale and CIBC World Markets. Mr. Pietrzak started his career at Price Waterhouse in New York. Mr. Pietrzak holds an M.B.A. in Finance from The Wharton School of the University of Pennsylvania and a B.S. in Accounting from Lehigh University. Mr. Pietrzak serves on the Dean’s Advisory Council for the Lehigh

 

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University College of Business, is a member of the Advisory Board of the Scholars of Finance and serves on the Board of Directors of First Tee – Metropolitan New York.

Mr. Pietrzak is supported not only by personnel of the Adviser, but also by having access to the global platform of KKR, which has approximately 941 investment professionals across public and private markets. KKR’s investment professionals provide access to an established platform for evaluating investments, managing risk and focusing on opportunities and are organized in industry-specific teams that conduct their own primary research and develop views on industry themes and trends. These investment professionals are also supported by an Investment Committee comprised of senior personnel that exercises oversight over, and provides insight to, the investment activities of the Company.

The portfolio manager primarily responsible for the management of the Company also manages other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following table identifies, as of December 31, 2024: (i) the number of other registered investment companies, pooled investment vehicles and other accounts managed by the portfolio manager and (ii) the total AUM of such companies, vehicles and accounts, and the number and total AUM of such companies, vehicles and accounts with respect to which the advisory fee is based on performance.

 

Consistent with KKR’s global, integrated culture, KKR has one firm-wide compensation and incentive structure based on a global profit and loss statement, which covers the portfolio manager. KKR’s compensation structure is designed to align the interests of the investment personnel serving the Company with those of the Company’s Shareholders and to give everyone a direct financial incentive to ensure that all of KKR’s resources, knowledge and relationships around the world are utilized to maximize risk-adjusted returns for each strategy.

Each of KKR’s senior executives, including the portfolio manager responsible for the management of the Company, receives a base salary and is eligible for a cash bonus and equity compensation, as well as additional incentives including “dollars at work” in KKR fund investments (other than the Company) and equity compensation. The cash bonus, equity compensation and “dollars at work” are discretionary, and “dollars at work” and equity awards are typically subject to a vesting period of several years.

All final compensation and other longer-term incentive award decisions are made by the KKR Management Committee based on input from managers. Compensation and other incentives are not formulaic, but rather are judgment and merit driven, and are determined based on a combination of overall firm performance, individual contribution and performance, business unit performance, and relevant market and competitive compensation practices for other businesses and the individual roles/responsibilities within each of the businesses.

 

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As of December 31, 2024, the portfolio manager of the Company beneficially owned the following amounts of common shares of the Company:

 

 

Pursuant to an investment advisory agreement, the Adviser receives an annual fee, payable monthly by the Company, in an amount equal to 1.25% of the Company’s month end net assets. The Management Fee is an expense paid out of the Company’s assets. The Management Fee is paid monthly in arrears within 30 days of the calculation of the Company’s NAV for each month.

The Adviser has agreed to reduce its Management Fee to an annual rate of 0.00% of the Company’s month end net assets (the “Management Fee Waiver”). The Management Fee Waiver will remain in effect through at least December 31, 2025, though the Adviser does not currently intend to terminate the Management Fee Waiver after that date. After December 31, 2025, the Management Fee Waiver may be terminated only upon 60 days’ notice by the Board or the Adviser.

A discussion regarding the basis for the approval of the investment advisory agreement by the Board is available in the Company’s report to Shareholders for the period ended December 31, 2023. The basis for any subsequent continuation of the Company’s investment advisory agreement will be provided in the annual or semi-annual reports to Shareholders for the periods during which such continuations occur.

In addition to the fees paid to the Adviser, the Company pays all fees, costs and expenses fairly allocable to the Company, related to the activities, business, operations or actual or potential investments of the Company, including without limitation: (a) fees, costs and expenses of outside counsel, accountants, auditors, appraisers, valuation experts, rating agencies, consultants, administrators, custodians, depositaries, directors and other similar outside advisors and service providers (including servicing companies in which KKR or its affiliates or eligible partners, members, managing directors, directors, officers or employees of KKR, the Adviser or their respective affiliates (collectively, “KKR Personnel”) have an interest) with respect to the Company and its potential and actual investments (including allocable compensation and expenses of senior advisors, executive advisors, industry advisors and technical consultants and allocable fees and expenses of all or any of KKR Capstone Americas LLC, KKR Capstone EMEA LLP, KKR Capstone EMEA (International) LLP, KKR Capstone Asia Limited and their Capstone-branded subsidiaries, which employ operating professionals dedicated to supporting KKR deal teams and portfolio companies (collectively, “Capstone”) related to the Company’s activities), and including the cost of any valuation of, or any fairness opinion relating to, any investment or other asset or liability or potential transaction, of the Company; (b) fees, costs and expenses of identifying, sourcing, investigating (and conducting diligence with respect to), evaluating, structuring, consummating, registering, holding, rating, monitoring or disposing potential and actual portfolio investments, including (i) brokerage commissions, clearing and settlement charges, investment banking fees, bank charges, custodial fees, placement, syndication and solicitation fees, arranger fees, expenses relating to short sales, sales commissions, and other investment, execution, closing and administrative fees, costs and expenses, (ii) any travel-related costs and expenses incurred in connection therewith (including costs and expenses of accommodations and meals, costs and expenses related to attending trade association meetings, conferences or similar meetings for purposes of evaluating actual or potential investment opportunities, and with respect to travel on aircraft,

 

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costs of travel at a comparable business class commercial airline rate) including any such expenses incurred in connection with attendance at meetings of relevant investment committees and portfolio management committees, (iii) expenses associated with portfolio and risk management including hedging transactions and related costs, (iv) fees, costs and expenses incurred in the organization, operation, administration, restructuring or dissolution, liquidation and termination of any entities through which the Company makes investments (including costs associated with establishing and maintaining a permanent residence in certain jurisdictions, such as employee compensation and benefits, allocable rent and other overhead of entities established to manage or administer such entities including entities in which KKR or its affiliates have an interest); and (v) fees, costs and expenses of outside counsel, accountants, auditors, consultants (including Capstone) and other similar advisors and service providers incurred in connection with designing, implementing and monitoring participation by portfolio companies or other issuers in compliance and operational “best practices” programs and initiatives; (c) any taxes, fees or other governmental charges levied against the Company or on its income or assets or in connection with its business or operations including the business or operations of any entities through which the Company invests and preparation expenses in connection with such governmental charges (which includes the preparation and filing of any forms, schedules, filings, information or other documents necessary to avoid the imposition of withholding or other taxes pursuant to any applicable tax reporting obligation and report of foreign bank and financial accounts) or to otherwise comply with applicable tax reporting obligations; (d) fees, costs and expenses incurred in connection with any audit, examination, investigation or other proceeding by any taxing authority or incurred in connection with any governmental or regulatory inquiry, investigation or proceeding, in each case, involving or otherwise applicable to the Company, including the amount of any judgments, settlements, remediation or fines paid in connection therewith, excluding, for the avoidance of doubt, any fine or penalty paid by the Adviser or its affiliates to a governmental body of competent jurisdiction on the basis of a finding that the Adviser or such affiliate has breached a fiduciary duty to the Company (for the avoidance of doubt, the foregoing does not include any fine or penalty related to activities taken by the Adviser or its affiliates on behalf of the Company); (e) expenses of the Board and its members (including (i) travel, accommodation, meal, event, entertainment and other similar fees, costs and expenses in connection with any meetings of the Board and (ii) the fees, costs and expenses of any legal counsel or other advisors retained by, or at the direction or for the benefit of, the Board); (f) fees, costs and expenses of holding any annual or other shareholder meeting; (g) the portion fairly allocable to the Company of fees, costs and expenses incurred in connection with legal, regulatory and tax services provided on behalf of the Company, its investments and portfolio companies and compliance with U.S. federal, state, or local law, or other law or other law and regulation relating to the Company’s activities (including expenses relating to the preparation and filing of regulatory filings of the Company); and expenses and fees incurred in connection with establishing, implementing, monitoring and/or measuring the impact of any sustainability-related policies and programs, including all fees, costs, and expenses incurred in connection with reporting on such sustainability-related policies and programs or otherwise evaluating the Company’s or its portfolio investments’ or prospective portfolio investments’ achievement of any sustainability-related objectives; (h) fees, costs and expenses associated with the Company’s administration, including in relation to receiving capital from and making distributions to shareholders, the administration of assets, financial planning and treasury activities, the representation of the Company, the preparation and delivery of all Company financial statements, tax returns, distribution notices, other reports and notices and other required or requested information provided to shareholders (including the fees, costs and expenses of any other third-party administrator that provides accounting and administrative services to the Company), fees, costs and expenses incurred to audit such reports, provide access to such reports or information (including through a website or other portal) and any other operational, secretarial or postage expenses relating thereto or arising in connection with the distribution thereof (and including, in each case, technology development and support with respect to such activities and other administrative support therefor), and allocable compensation and overhead of KKR Personnel engaged in the aforementioned activities and KKR Personnel providing oversight of any third party administrator engaged in the aforementioned activities; (i) principal, interest on and fees, costs and expenses relating to or arising out of all borrowings made by the Company, including fees, costs and expenses incurred in connection with the negotiation and establishment of the relevant credit facility, other indebtedness, guarantee, line of credit, loan commitment, letter of credit, equity commitment letter, hedging guarantee or similar credit support or other indebtedness involving the Company or any investment or relevant arrangements with respect to such borrowings

 

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or related to securing the same by mortgage, pledge, or other encumbrance and the fees, costs and expense of any amendments or modifications of such arrangements, and other fees, costs and expenses in respect of derivative contracts (including any payments under, and any margin expenses relating to, such derivative contracts or any posting of margin or collateral with respect to such derivative contracts); (j) fees, costs and expenses relating to a Default (but only to the extent not paid or otherwise borne by the Defaulting Shareholder); (k) fees, costs and expenses relating to a transfer of a shares (but only to the extent not paid or otherwise borne by the relevant transferring shareholder and/or the transferee); (l) fees, costs and expenses related to procuring, developing, implementing or maintaining information technology, data subscription and license-based services, research publications, materials, equipment and services, computer software or hardware and electronic equipment used in connection with providing services to the Company (including reporting as described herein), in connection with identifying, investigating (and conducting diligence with respect to) or evaluating, structuring, consummating (including license fees and maintenance costs for workflow technology that facilitates the closing of investments by, among other things, managing allocations, conflicts of interest and compliance with law, all in accordance with policies and procedures established by KKR and its affiliates), holding, monitoring, or disposing of potential and actual investments, or in connection with obtaining or performing research related to potential or actual investments, industries, sectors, geographies or other relevant market, economic, geopolitical or similar data or trends, including risk analysis software; (m) premiums and fees for insurance for the benefit of, or allocated to, the Company (including directors’ and officers’ liability, errors and omissions or other similar insurance policies, and any other insurance for coverage of liabilities incurred in connection with the activities of, or on behalf of, the Company) including an allocable portion of the premiums and fees for one or more “umbrella” policies that cover the Company and, to the extent applicable, costs of ERISA fidelity bonds, if applicable; (n) expenses of any actual or potential litigation or other dispute related to the Company or any actual or potential investment or portfolio company (including expenses incurred in connection with the investigation, prosecution, defense, judgment or settlement of litigation and the appointment of any agent for service of process on behalf of the Company or the shareholders) and other extraordinary expenses related to the Company or actual or potential investment or portfolio company (including fees, costs and expenses that are classified as extraordinary expenses under generally accepted accounting principles in the United States (or such other accounting standards as are otherwise required)) excluding for the avoidance of doubt, any expenses with respect to which an indemnitee would not be entitled to indemnification or advancement; (o) fees, costs and expenses required under or otherwise related to the Company’s indemnification obligations, including advancement of any such fees, costs or expenses to persons entitled to such indemnification, or other matters that are the subject of indemnification or contribution; (p) fees, costs and expenses incurred in connection with dissolving, liquidating and terminating the Company; (q) all other costs and expenses of the Company in connection with the activities, business or operation of the Company and its potential and actual investments; (r) in the case of each of the foregoing items in this definition, all similar items in connection with any other investor Company vehicle, feeder Company, portfolio companies or entities through which the Company makes any investment, to the extent not otherwise paid or borne by such other fund vehicle, feeder fund, portfolio companies or entities; and (s) all other costs and expenses of the Company in connection with the business or operation of the Company and its investments, including organizational and offering expenses. For the avoidance of doubt, fund expenses may include any of the fees, costs, expenses and other liabilities described above incurred in connection with services provided, or other activities engaged in, by the Adviser and its affiliates, in addition to third parties. In determining the amount of fund expenses that may be fairly allocable to the Company and to any other fund advised by the Adviser or its affiliates that participate in investments with the Company, the Adviser will allocate such fund expenses in a manner that is consistent with an allocation methodology established by the Adviser and its affiliates.

Below is a list of the officers of the Company and their present positions and principal occupations during the past five years. Officers are annually elected by the Directors.

 

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The Company’s officers do not receive compensation from the Company.

A control person is a person who beneficially owns more than 25% of the voting securities of a company. As of April 1, 2025, KKR US Direct Lending L.P. is the sole shareholder and a control person of the Company.

 

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The discussion below provides general tax information related to an investment in Shares of the Company. Because tax laws are complex and often change, Shareholders should consult their tax advisors about the tax consequences of an investment in the Company. Unless otherwise noted, the following tax discussion applies only to U.S. Shareholders that hold the Shares as capital assets. A U.S. Shareholder is an individual who is a citizen or resident of the United States, a U.S. corporation, a trust if it (a) is subject to the primary supervision of a court in the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has made a valid election to be treated as a U.S. person, or any estate the income of which is subject to U.S. federal income tax regardless of its source.

The Company elects to be treated, and intends to qualify each taxable year, as a regulated investment company (a “RIC”) under Subchapter M of the Code. To qualify under Subchapter M for the favorable tax treatment accorded to RICs, the Company must, among other things: (1) distribute to its Shareholders in each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code, but without regard to the deduction for dividends paid) and its net income; (2) derive in each taxable year at least 90% of its gross income from (a) dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gain from options, futures and forward contracts) derived with respect to its business of investing in such stock, securities or foreign currencies; and (b) net income derived from interests in certain publicly traded partnerships that are treated as partnerships for U.S. federal income tax purposes and that derive less than 90% of their gross income from the items described in (a) above (each, a “Qualified Publicly Traded Partnership”); and (3) diversify its holdings so that, at the end of each quarter of each taxable year of the Company (a) at least 50% of the value of the Company’s total assets is represented by cash, cash items (including receivables), U.S. government securities and securities of other RICs, and other securities, with these other securities limited, with respect to any one issuer, to an amount not greater in value than 5% of the value of the Company’s total assets, and to not more than 10% of the outstanding voting securities of such issuer, and (b) not more than 25% of the value of the Company’s total assets is represented by the securities (other than U.S. government securities or securities of other RICs) of (I) any one issuer, (II) any two or more issuers that the Company controls and that are determined to be engaged in the same or similar trades or businesses or related trades or businesses or (III) any one or more Qualified Publicly Traded Partnerships. As a RIC, the Company generally is not subject to U.S. federal income tax on its investment company taxable income and net capital gain (the excess of net long-term capital gain over net short-term capital loss), if any, that it distributes in each taxable year to its Shareholders. Dividends on the Shares in amounts representing substantially all of the net investment income, if any, earned each year will be paid at least annually at the Company’s discretion. The Company intends to pay dividends representing substantially all of the net capital gains, if any, it earns each year at least annually.

If the Company failed to qualify for the favorable tax treatment accorded to RICs in any taxable year, the Company is subject to U.S. federal income tax at regular corporate rates on its taxable income (including distributions of net capital gain), even if such income were distributed to its Shareholders, and all distributions out of earnings and profits would be taxed to Shareholders as ordinary dividend income. Such distributions generally would be eligible (i) to be treated as “qualified dividend income” in the case of individual and other Shareholders and (ii) for the dividends received deduction in the case of corporate Shareholders. In addition, the Company could be required to recognize unrealized gains, pay taxes and make distributions (which could be subject to interest charges) before requalifying for taxation as a RIC.

A RIC that fails to distribute, by the close of each calendar year, an amount at least equal to the sum of 98% of its ordinary taxable income for such calendar year and 98.2% of its capital gain net income (adjusted for certain ordinary losses) for the period ending on October 31 of such calendar year, plus any shortfalls from any prior year’s required distribution, is liable for a 4% excise tax on the portion of the undistributed amounts of such income that are less than the required distributions. For these purposes, the Company is deemed to have distributed any income or gain on which it paid U.S. federal income tax.

 

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Certain of the Company’s investments are expected to be subject to special U.S. federal income tax provisions that may, among other things, (1) disallow, suspend or otherwise limit the allowance of certain losses or deductions, (2) convert lower-taxed long-term capital gain into higher-taxed short-term capital gain or ordinary income, (3) convert an ordinary loss or a deduction into a capital loss, the deductibility of which is more limited, (4) adversely affect when a purchase or sale of stock or securities is deemed to occur, (5) adversely alter the intended characterization of certain complex financial transactions, and (6) cause the Company to recognize income or gain without a corresponding receipt of cash (referred to as “phantom income”). For example, with respect to phantom income, if the Company holds debt obligations that are treated under applicable tax rules as having OID (such as debt instruments with PIK interest or, in certain cases, increasing interest rates or issued with equity or warrants) or debt obligations that are acquired with market discount in respect of which an election has been made to accrue such market discount on a current basis, the Company must include in income each taxable year a portion of the OID or market discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year. The Company may also have to include in income other amounts that it has not yet received in cash, such as PIK interest and deferred loan origination fees that are paid after origination of the loan or are paid in compensation such as equity or warrants. Because any OID or other amounts accrued will be included in the Company’s investment company taxable income for the year of accrual, the Company may be required to make a distribution to its Shareholders in order to satisfy the annual distribution requirement, even though it will not have received any corresponding cash amount. Moreover, there may be uncertainty as to the appropriate treatment of certain of the Company’s investments for U.S. federal income tax purposes. In particular, the U.S. federal income tax treatment of investments in debt securities that are rated below investment grade is uncertain in various respects.

Distributions to Shareholders by the Company of ordinary income (including “market discount” realized by the Company on the sale of debt securities), and of net short-term capital gains, if any, realized by the Company are generally taxable to Shareholders as ordinary income to the extent such distributions are paid out of the Company’s current or accumulated earnings and profits. Distributions, if any, of net capital gains properly reported as “capital gain dividends” are taxable as long-term capital gains, regardless of the length of time the Shareholder has owned Shares of the Company. A distribution of an amount in excess of the Company’s current and accumulated earnings and profits (as determined for U.S. federal income tax purposes) will be treated by a Shareholder as a return of capital which will be applied against and reduce the Shareholder’s basis in his or her Shares. To the extent that the amount of any such distribution exceeds the Shareholder’s basis in his or her Shares, the excess will be treated by the Shareholder as gain from a sale or exchange of the Shares. Distributions paid by the Company generally are not eligible for the dividends received deduction allowed to corporations or for the reduced rates applicable to certain qualified dividend income received by Shareholders.

Under applicable Treasury regulations, certain distributions reported by a Company as section 163(j) interest dividends may be treated as interest income by Shareholders for purposes of the tax rules applicable to interest expense limitations under Code section 163(j). Such treatment by the Shareholder is generally subject to holding period requirements and other potential limitations, although the holding period requirements are generally not applicable to dividends declared by money market funds and certain other funds that declare dividends daily and pay such dividends on a monthly or more frequent basis. The amount that a Company is eligible to report as a Section 163(j) dividend for a tax year is generally limited to the excess of the Company’s business interest income over the sum of the Company’s (i) business interest expense and (ii) other deductions properly allocable to the Company’s business interest income.

Although dividends generally are treated as distributed when paid, dividends declared in October, November or December, payable to Shareholders of record on a specified date in one of those months, and paid during the following January, are treated as having been distributed by the Company (and received by Shareholders) on December 31 of the year in which declared.

For any period that the Company does not qualify as a “publicly offered regulated investment company,” as defined in the Code, Shareholders are taxed as though they received a distribution of some of the Company’s

 

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expenses. A “publicly offered regulated investment company” is a RIC whose shares are either (i) continuously offered pursuant to a public offering, (ii) regularly traded on an established securities market or (iii) held by or for at least 500 persons at all times during the taxable year. If the Company is not a publicly offered regulated investment company for any period, a U.S. Shareholder’s allocable portion of its affected expenses, including the management fees, will be treated as an additional distribution to the Shareholder and will be deductible by such Shareholder only to the extent permitted under the limitations described below. The ability of taxpayers to deduct such expenses, referred to as miscellaneous itemized deductions, is subject to significant limitations. In particular, for taxable years beginning before January 1, 2026, Shareholders, including individuals, trusts, and estates generally will not be entitled to a deduction for such expenses, and for taxable years beginning after December 31, 2025, these expenses will be deductible to taxpayers only to the extent they exceed 2% of such a Shareholder’s adjusted gross income.

In general, the sale or other disposition of Shares (except pursuant to a repurchase by the Company, as described below) results in capital gain or loss to Shareholders. A holder’s gain or loss is generally a long-term capital gain or loss if the Shares have been held for more than one year. Present law taxes both long- and short-term capital gains of corporations at the rates applicable to ordinary income. For taxpayers, however, long-term capital gains are currently eligible for reduced rates of taxation. Losses realized by a holder on the sale or exchange of Shares held for six months or less are treated as long-term capital losses to the extent of any distribution of long-term capital gain received (or amounts designated as undistributed capital gains) with respect to such Shares. In addition, no loss will be allowed on the sale or other disposition of Shares if the owner acquires or enters into a contract or option to acquire securities that are substantially identical to such Shares within 30 days before or after the disposition. In such case, the basis of the securities acquired will be adjusted to reflect the disallowed loss.

From time to time, the Company may offer to repurchase its outstanding Shares. Shareholders who tender all Shares held, or considered to be held, by them will be treated as having sold their Shares and generally will realize a capital gain or loss. If a Shareholder tenders fewer than all of its Shares or fewer than all Shares tendered are repurchased, such Shareholder may be treated as having received a taxable dividend upon the tender of its Shares. In such a case, there is a risk that Shareholders, and Shareholders who tender some but not all of their Shares or fewer than all of whose Shares are repurchased, in each case whose percentage interests in the Company increase as a result of such tender, will be treated as having received a taxable distribution from the Company. The extent of such risk will vary depending upon the particular circumstances of the tender offer, and in particular whether such offer is a single and isolated event or is part of a plan for periodically redeeming Shares of the Company.

The Company may be required to withhold from all distributions and redemption proceeds payable to U.S. Shareholders who fail to provide the Company with their correct taxpayer identification numbers or to make required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. Certain Shareholders specified in the Code generally are exempt from such backup withholding. This backup withholding is not an additional tax. Any amounts withheld may be refunded or credited against the Shareholder’s U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.

If a Shareholder (other than a partnership) is not a U.S. Shareholder (other than such a Shareholder whose ownership of Shares is effectively connected with a U.S. trade or business), certain dividends received by such Shareholder from the Company may be subject to U.S. federal withholding tax. To the extent that Company distributions consist of ordinary dividends that are subject to withholding, the applicable withholding agent will generally be required to withhold U.S. federal income tax at the rate of 30% (or such lower rate as may be determined in accordance with any applicable treaty). However, dividends paid by the Company that are “interest-related dividends” or “short-term capital gain dividends” are generally exempt from such withholding, in each case to the extent the Company properly reports such dividends to Shareholders. For these purposes, interest-related dividends and short-term capital gain dividends generally represent distributions of interest or

 

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short-term capital gains that would not have been subject to U.S. federal withholding tax at the source if they had been received directly by a Shareholder, and that satisfy certain other requirements. No assurance can be given as to what percentage of the Company’s distributions are eligible for this exemption from withholding of U.S. federal income tax or, if eligible, will be reported as such by the Company. In the case of stock held through an intermediary, the intermediary may withhold U.S. federal income tax even if the Company reports the payment as an interest-related dividend or short-term capital gain dividend. To qualify for this exemption from withholding, a Shareholder must comply with applicable certification requirements relating to its tax residency status (including, in general, furnishing an IRS Form IRS Form IRS Form IRS Form (and any required attachments) or IRS Form or an acceptable substitute or successor form). In such a scenario, tax withheld by the intermediary would generally be refundable, but would require the Shareholder to file a U.S. income tax return to claim the refund. Net capital gain dividends (that is, distributions of the excess of net long-term capital gain over net short-term capital loss) distributed by the Company to a Shareholder will not be subject to U.S. federal withholding tax.

The Company may be required to withhold from distributions to a Shareholder that are otherwise exempt from U.S. federal withholding tax (or taxable at a reduced treaty rate) unless the Shareholder certifies his or her foreign status under penalties of perjury or otherwise establishes an exemption.

Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), a 30% United States federal withholding tax may apply to any ordinary dividends and other distributions that the Company pays to (i) a “foreign financial institution” (as specifically defined in the Code), whether such foreign financial institution is the beneficial owner or an intermediary, unless such foreign financial institution agrees to verify, report and disclose its “United States account” holders (as specifically defined in the Code) and meets certain other specified requirements or (ii) a foreign entity, whether such foreign entity is the beneficial owner or an intermediary, unless such entity provides a certification that the beneficial owner of the payment does not have any substantial United States owners or provides the name, address and taxpayer identification number of each such substantial United States owner and certain other specified requirements are met. In certain cases, the relevant foreign financial institution or foreign entity may qualify for an exemption from, or be deemed to be in compliance with, these rules. In addition, foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. Shareholders should consult their own tax advisor regarding FATCA and whether it may be relevant to their ownership and disposition of Shares.

The foregoing tax discussion is for general information only. The provisions of the Code and Treasury regulations thereunder presently in effect as they directly govern the taxation of the Company and its Shareholders are subject to change by legislative or administrative action, and any such change may be retroactive with respect to the Company’s transactions. The foregoing does not represent a detailed description of the U.S. federal income tax considerations relevant to special classes of taxpayers including, without limitation, financial institutions, insurance companies, investors in pass-through entities, U.S. Shareholders whose “functional currency” is not the U.S. dollar, organizations, dealers in securities or currencies, traders in securities or commodities that elect mark to market treatment, or persons that will hold Shares as a position in a “straddle,” “hedge” or as part of a “constructive sale” for U.S. federal income tax purposes. In addition, this discussion does not address the application of the Medicare tax on net investment income or the U.S. federal alternative minimum tax.

Shareholders are advised to consult with their own tax advisors for more detailed information concerning federal income tax matters.

 

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KKR Credit Advisors (US) LLC also serves as administrator to the Company (the “Administrator”). Under the administration agreement, the Administrator is responsible for generally managing the administrative affairs of the Company. The Administrator has also entered into a agreement with The Bank of New York Mellon.

KKR Capital Markets LLC is the principal underwriter and distributor of the Shares. The Distributor, located at 30 Hudson Yards, New York, NY 10001, is a broker-dealer registered with the SEC and is a member of FINRA.

The Company has engaged The Bank of New York Mellon (the “Custodian”) as the Company’s custodian. The Custodian will hold cash, securities, and other assets of the Company as required by the 1940 Act. The Company has engaged BNY Mellon Investment Servicing (US) Inc. (the “Transfer Agent”) as the Company’s transfer agent.

 

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Certain legal matters in connection with the offering of the Company’s securities will be passed on for the Company by Dechert LLP.

Deloitte & Touche LLP serves as the independent registered public accounting firm of the Company and audits the financial statements of the Company. Deloitte & Touche LLP is located at 555 Mission Street, San Francisco, California 94105.

The Adviser has responsibility for decisions to buy and sell securities and other instruments for the Company, the selection of brokers and dealers to effect the transactions and the negotiation of prices and any brokerage commissions on such transactions. Although the Adviser will be primarily responsible for the placement of the Company’s portfolio business, the policies and practices in this regard are subject to review by the Board.

With respect to interests in Senior Loans, the Company generally engages in privately negotiated transactions for purchase or sale in which the Adviser negotiates on behalf of the Company (although a more developed market may exist for certain Senior Loans). The Company will, from time to time, be required to pay fees, or give up a portion of interest and any fees payable to the Company, to the lender selling participations or assignments to the Company. The Adviser will determine the lenders from whom the Company will purchase assignments and participations by considering their professional ability, level of service, relationship with a borrower, financial condition, credit standards and quality of management. The illiquidity of many Senior Loans may restrict the ability of the Adviser to locate in a timely manner persons willing to purchase the Company’s interests in Senior Loans at a fair price should the Company desire to sell such interests. See “Risks—First Lien, Senior Secured Loans and Senior Secured Bonds Risk” in the prospectus. Affiliates of the Adviser may participate in the primary and secondary market for Senior Loans. Because of certain limitations imposed by the 1940 Act, this may restrict the Company’s ability to acquire some Senior Loans. The Adviser does not believe that this will have a material effect on the Company’s ability to acquire Senior Loans consistent with its investment policies.

As most transactions made by the Company are principal transactions at net prices, the Company generally incurs little or no brokerage costs. The portfolio securities in which the Company invests are normally purchased directly from the issuer or in the (“OTC”) market from an underwriter or market maker for the securities. Purchases from underwriters of portfolio securities include a commission or concession paid by the issuer to the underwriter and purchases from dealers serving as market makers include a spread or markup to the dealer between the bid and asked price. Sales to dealers are effected at bid prices.

The Company will, from time to time, also purchase certain money market instruments directly from an issuer, in which case no commissions or discounts are paid (although the Company could indirectly bear fees and expenses of any money market funds in which it invests), or could purchase and sell listed securities on an exchange, which are effected through brokers who charge a commission for their services.

In effecting securities transactions, the Adviser seeks to obtain the best execution of orders. Commission rates are a component of price and are considered along with other relevant factors. In determining the broker or dealer to be used and the commission rates to be paid, the Adviser considers the utility and reliability of brokerage services, including execution capability and performance, financial responsibility, investment information, market insights, other research provided by such brokers, and access to analysts, management and idea generation. Accordingly, the commissions charged by any such broker may be greater than the amount another firm might charge if the Adviser determines in good faith that the amount of such commissions is reasonable in

 

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relation to the value of the brokerage services and research information provided by such brokers. Consistent with the requirements of best execution, brokerage commissions on accounts may be directed to brokers in recognition of investment research and information furnished as well as for services rendered in execution of orders by such brokers. By allocating transactions in this manner, the Adviser may be able to supplement its research and analysis with the views and information of brokerage firms. The Adviser may also allocate a portion of its brokerage business to firms whose employees participate as brokers in the introduction of investors to the Adviser or who agree to bear the expense of capital introduction, marketing or related services by third parties. Eligible research or brokerage services provided by brokers through which portfolio transactions for the Adviser are executed may include research reports on particular industries and companies, economic surveys and analyses, recommendations as to specific securities, online quotations, news and research services, financial publications and other products and services (e.g., software based applications for market quotes and news, database programs providing investment and industry data) providing lawful and appropriate assistance to the portfolio managers and their designees in the performance of their investment decision-making responsibilities on behalf of the Adviser and other accounts which their affiliates manage (collectively, “Soft Dollar Items”). The Adviser and its affiliates generally use such products and services (if any) for the benefit of all of their accounts. Soft Dollar Items may be provided directly by brokers, by third parties at the direction of brokers or purchased on behalf of the Company and its affiliates with credits or rebates provided by brokers. Any Soft Dollar Items obtained in connection with portfolio transactions for the Company are intended to fall within the “safe harbor” of Section 28(e) of the Exchange Act. As noted above, because most of the Company’s transactions will likely be principal transactions, the Company will likely not incur significant brokerage commissions (although it will be subject to and mark-downs imposed by dealers). Section 28(e) generally only applies with respect to brokerage commissions; as such, the Company does not expect to benefit from any significant amount of Soft Dollar Items.

The Adviser may also place portfolio transactions, to the extent permitted by law, with brokerage firms affiliated with the Company or the Adviser if they reasonably believe that the quality of execution and the commission are comparable to those available from other qualified firms. Similarly, to the extent permitted by law and subject to the same considerations on quality of execution and comparable commission rates, the Adviser may direct an executing broker to pay a portion or all of any commissions, concessions or discounts to a firm supplying research or other services.

The Adviser may place portfolio transactions at or about the same time for other advisory accounts, including other investment companies. The Adviser seeks to allocate portfolio transactions equitably whenever concurrent decisions are made to purchase or sell securities for the Company and another advisory account. In some cases, this procedure could have an adverse effect on the price or the amount of securities available to the Company. In making such allocations among the Company and other advisory accounts, the main factors considered by the Adviser are the respective sizes of the Company and other advisory accounts, the respective investment objectives, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held and opinions of the persons responsible for recommending the investment. See “Conflicts of Interest.”

The placing and execution of orders for the Company also is subject to restrictions under U.S. securities laws, including certain prohibitions against trading among the Company and its affiliates (including the Adviser or its affiliates). Certain broker-dealers, through which the Company may effect securities transactions, may be affiliated persons (as defined in the 1940 Act) of the Company or affiliated persons of such affiliates. The Board has adopted certain policies incorporating the standards of Rule issued by the SEC under the 1940 Act which require that the commissions paid to affiliates of the Company be reasonable and fair compared to the commissions, fees or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities during a comparable period of time. The rule and procedures also contain review requirements and require the Adviser to furnish reports to the directors and to maintain records in connection with such reviews. In addition, the Company will, from time to time, purchase securities in a placement for which affiliates of the Adviser have acted as agent to or for issuers, consistent with applicable

 

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rules adopted by the SEC or regulatory authorization, if necessary. The Company will not purchase securities from or sell securities to any affiliate of the Adviser acting as principal. The Adviser is prohibited from directing brokerage transactions on the basis of the referral of clients or the sale of shares of advised investment companies.

Portfolio turnover rate is not considered a limiting factor in the execution of investment decisions for the Company. Because it is difficult to predict accurately portfolio turnover rates, actual turnover may be higher or lower than expected. Higher portfolio turnover results in increased Company costs, including brokerage commissions, dealer and other transaction costs on the sale of securities and on the reinvestment in other securities.

 

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The Board has delegated the responsibility to the Adviser to vote the Company’s proxies. The Adviser votes proxies according to the proxy voting policies and procedures (“Proxy Policy”) currently in effect as of the date of this Confidential Private Placement Memorandum, a copy of which appears below. These guidelines are reviewed periodically by the Adviser as well as the Board, and, accordingly, are subject to change.

The Adviser has the responsibility of voting proxies and corporate actions that it receives on behalf of the Company. Proxy proposals received by the Adviser and designated in its Proxy Policy as “For” or “Against” are voted by the Adviser in accordance with the Proxy Policy. Proxy proposals received by the Adviser and designated in the Proxy Policy as “Case by Case” (or not addressed in the Proxy Policy) and all corporate actions are reviewed by the Adviser and voted in the best interest of the Company. Notwithstanding the foregoing, the Adviser may vote a proxy contrary to the Proxy Policy if the Adviser, with the assistance of the analyst who is in charge of the issuer, determines that such action is in the best interest of the Company. In the event that the Adviser votes contrary to the Proxy Policy or with respect to “Case by Case” issues, the Adviser, with the assistance of the analyst who is in charge of the issuer, will document the basis for the Adviser’s decision.

In addition, the Adviser may choose not to vote proxies or corporate actions in certain situations, such as: (i) where the Company has informed the Adviser that it wishes to retain the right to vote the proxy or corporate action; (ii) where the Adviser deems the cost of voting would exceed any anticipated benefit to the Company; or (iii) where a proxy or corporate action is received by the Adviser for a security it no longer manages on behalf of the Company. The Adviser with the assistance of the analyst who is in charge of the issuer will document for the basis of the Adviser’s decision not to vote.

The Adviser may occasionally be subject to conflicts of interest in the voting of proxies due to business or personal relationships it maintains with persons having an interest in the outcome of certain votes. The Adviser, its affiliates and/or its employees may also occasionally have business or personal relationships with the proponents of proxy proposals, participants in proxy contests, corporate directors and officers or candidates for directorships. If at any time, the Adviser becomes aware of an existing or potential conflict of interest relating to a particular proxy proposal, the Adviser’s Conflicts Committee (“Conflicts Committee”), or its designee, must be notified. Provided the Conflicts Committee has determined that a conflict or potential for a conflict exists, the proxy must be voted in alignment with the recommendation set forth by Institutional Shareholder Services Inc. Appropriate documentation are maintained by the Conflicts Committee.

Information on how the Company voted proxies (if any) relating to portfolio securities during the most recent period are available without charge by calling toll-free (866) or on the SEC’s website at http://www.sec.gov.

 

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The Company and the Adviser have each adopted codes of ethics pursuant to the 1940 Act that establish procedures for personal investments and restrict certain personal securities transactions. Personnel subject to these codes may invest in securities for their personal investment accounts, including securities that may be purchased or held by the Company, so long as such investments are made in accordance with the code’s requirements. In addition, the code of ethics is available on the EDGAR Database on the SEC’s website at http://www.sec.gov. You may also obtain copies of each code of ethics, after paying a duplicating fee, by electronic request at the publicinfo@sec.gov.

The Company’s financial statements as of and for the period ended December 31, 2024, including accompanying notes thereto and the report of the Company’s independent registered public accounting firm thereon, are incorporated by reference from the Company’s annual report on Form N-CSR for the fiscal year ended December 31, 2024.

A Registration Statement on any amendments thereto, relating to the shares offered hereby, has been filed by the Company with the SEC, Washington, D.C. This Confidential Private Placement Memorandum does not contain all of the information set forth in the Registration Statement, such as the exhibits and schedules thereto. For further information with respect to the Company and the Shares, reference is made to the Registration Statement. Statements contained this Confidential Private Placement Memorandum as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. A copy of the Registration Statement may be obtained from the SEC upon the payment of certain fees prescribed by the SEC.

 

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