KKR Makes First Blockchain Investment With ParaFi Fund Stake
(Bloomberg) -- KKR & Co. has invested in the flagship fund of blockchain specialist ParaFi Capital in its first foray into the technology that powers cryptocurrencies, according to people with knowledge of the matter.
The private-equity firm, which has about $429 billion of assets, made the investment directly from its balance sheet, said one of the people, who declined to discuss the terms. ParaFi, which focuses on decentralized finance markets, also counts KKR co-founder Henry Kravis among its investors.
The move is an exploratory step into the booming world of cryptocurrencies, and meant to be a play on blockchain, not digital coins themselves. The New York-based firm also has established a working group to focus on best-use cases for the technology, one of the people said. In July, rival Apollo Global Management Inc. announced it was collaborating with blockchain startup Figure Technologies, sharpening its focus on financial-technology innovation.
Spokespeople for ParaFi and KKR declined to comment.
KKR joins a growing number of high-profile investors who have deployed capital in funds and companies in virtual currencies or the underlying technology. The growing mainstream appeal has led to a surge in assets invested in the so-called decentralized finance space. The total dollar value locked up in DeFi investments has risen from $7 billion a year ago to more than $160 billion today, according to website DeFiLlama.
ParaFi, which manages about $1 billion, was founded in 2018 by Ben Forman, who previously worked in KKR’s credit business and led its in-house research on blockchain and crypto. Other investors in the Greenwich, Connecticut-based firm include Mike Novogratz’s Galaxy Digital Ventures and Bain Capital Ventures.
KKR’s investment is the latest demonstration of the growing reach that large U.S. buyout firms have across financial markets. The firm has expanded well beyond its roots in leveraged buyouts into other areas including credit, infrastructure and real estate, as well as fast-growing technology companies.
©2021 Bloomberg L.P.