KKR, one of the world’s largest private equity firms, is set to distribute $75 million to employees following the sale of GeoStabilization International (GSI) to Leonard Green & Partners. The move will benefit around 900 staff, most of whom are construction workers at the geohazard mitigation and road safety services company.
The payments, which vary based on role and tenure, will see long-serving employees receive up to $325,000. This marks one of KKR’s latest efforts to involve workers in the financial success of its portfolio companies, as the firm seeks to reshape perceptions of the private equity industry.
The private equity sector has long grappled with criticism, often facing accusations of greed and elitism. However, some firms are taking steps to improve their image, with KKR leading the way.
To further support the workforce, KKR is also offering personal financial coaching and tax preparation services. This initiative reflects a broader effort by Pete Stavros, KKR’s Global Co-Head of Private Equity, who has championed the idea of giving employees a financial stake in the companies they work for. In April 2022, Stavros launched Ownership Works, a non-profit organisation that promotes employee ownership as a way to engage workers and improve business outcomes.
Stavros highlighted GSI as a “prime example of what ownership cultures can accomplish within the services sector,” adding that the success of the company illustrates “the power of an engaged workforce.”
While sales of this nature often result in bonuses for senior executives, KKR has previously made similar awards to nearly 110,000 blue-collar employees across 50 companies since 2011. However, it is worth noting that the $75 million being distributed to GeoStabilization International staff represents less than 10% of the deal’s reported $1 billion total value.
The sale marks a significant return for KKR, which has reportedly achieved a fivefold increase on its initial investment in GeoStabilization International since acquiring the company in December 2018. During that time, GSI has nearly tripled its revenue and profits, underlining the success of the investment.
As KKR continues its efforts to reshape perceptions of private equity, the firm’s emphasis on employee ownership and profit-sharing schemes could set a new precedent for the industry.
