Spotlight on Varun Khanna, Partner & Co-Head of Asset Based Finance, KKR
Global Thought Leader Spotlight
Varun Khanna, Partner & Co-Head of Asset Based Finance, KKR
In my role as Partner and Co-Head of Asset-Based Finance at KKR, I am responsible for overseeing the asset-based finance investment team as well as KKR’s asset-based finance funds and accounts.
I joined KKR in 2016 as one of the first members of the ABF investment team, which now consists of 36 investment professionals. Additionally, I sit on KKR’s Global Asset-Based Finance Investment Committees. I also serve on the Board of Directors for several Asset-Based Finance portfolio companies including Activate Capital, Pepper, Kilter Finance, and Oodle.
Key themes driving risks and opportunities
Given the current geopolitical environment, we believe that now is a strong time to lean into private credit given its ability to provide strong contractual yield and to act as a shock absorber from market volatility. Asset-Based Finance (ABF) can offer investors consistent, compounding, contractual income.
Moreover, over the last 15 years, the disintermediation of traditional lenders has been critical to the growth of ABF. As banks continue to pull back, rationalising their capital through loan sales and synthetic risk transfers, financial companies are sharpening their tools, and vast cohorts of creditworthy borrowers have been looking for alternative sources of capital.
We believe that that these structural factors will continue to support the growth of ABF - the opportunity set here is enormous - over US$6 trillion today and projected to exceed US$9 trillion.
In addition, we have begun to see a new opportunity with corporate partnerships in assisting them to move away from a capital-intensive balance sheet model to one that is capital-light. We believe this is an emerging opportunity to provide highly bespoke financing solutions to help companies optimise capital allocations.
Lastly, through our ABF team and broader network, we have developed the connections that allow us to access niche sectors and structure deals that are often unavailable to the broader market. Our team is purposely set up to cover a broad array of sectors across the globe, which allows us to pivot where the best relative value is at any moment in time.
Implications for institutional investors
Most institutional investors have private corporate credit exposure. As private credit has become a meaningful, permanent allocation in portfolios, we think it is important to consider diversifying to complement this allocation. We believe that an ABF allocation is a natural next step for those looking to enhance their exposure away from corporate risk while maintaining or adding structured downside protection (i.e. contractual cash flows) and current income in private markets.
Incorporating Asset-Based Finance into a private credit allocation enhances diversification both at the asset level, since investments are backed by diverse and granular pools of assets, and at the portfolio level, through non-corporate exposure. In periods like this, where tariff-driven cost pressures are front and centre it’s also particularly compelling to focus on ABF as it is secured risk, which is backed by real collateral.
This ongoing shift in tariff-driven inflation dynamics suggests that business costs could rise, especially in sectors reliant on imported goods, underscoring the critical value of credit selection, diversification, and active risk management. ABF is anchored in contractual, collateral-backed structures tied to liquidation value, rather than growth.
When evaluating and selecting an asset-based finance manager, investors should look to scaled platforms. Given this asset class has high barriers to entry – a global, multi-sector approach requires many resources. Further, many private ABF deals are sourced through proprietary channels and relationships, and large platforms, that are also owners of captive origination platforms, have a multiplier effect across their rolodex and therefore are better positioned to access and source opportunities.
Varun will be presenting at Global Investment Institute’s upcoming Private Credit Investment Forum, taking place on Thursday, 8 May 2025 at the Grand Hyatt Melbourne, Victoria. To register your interest in attending, click here or for more information email zlatan@globalii.com.au.
Varun Khanna, Partner & Co-Head of Asset Based Finance, KKR
Varun joined KKR in 2016 and is a Partner in the firm's Private Credit business, located in London. He co-heads the firm's global Asset-Based Finance investment strategy and is a portfolio manager for KKR's asset-based finance funds. Varun is a member of the Global Asset Based Finance Investment Committees. He also serves on Boards of Directors of several KKR portfolio companies, including Activate Capital, Pepper, Kilter Finance and Oodle.
Prior to joining KKR, Varun was a managing director at Deutsche Bank in the structured finance division. He started his career at Deutsche Bank as an equity research analyst covering technology companies.
Varun holds a B.A., M.A. in Economics from the University of Cambridge and a B.A. in Economics from St. Stephen's College, University of Delhi
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