KKR and Carlyle Turn to Private Credit as Dealmaking Dries Up

Private equity firms are increasingly leaning on businesses outside of traditional buyout strategies and taking a sharper look at costs as they battle a prolonged slump in dealmaking.

The Federal Reserve’s aggressive campaign to combat inflation with rate hikes made debt-funded buyouts less attractive and caused these firms to pause asset sales as they wait for markets to rebound. Firms like Carlyle Group Inc. and KKR & Co. have found refuge in new areas like private credit and insurance.

KKR’s credit business helped offset weaker private equity results in their most recent quarterly earnings, announced on Tuesday. Meanwhile Carlyle ...