Five Questions for Philipp Freise

Some years ago, Philipp Freise was still sitting in lecture halls at WHU – Otto Beisheim School of Management in Vallendar. Today, he is responsible for billion-dollar transactions at one of the world’s most prestigious private equity firms.

After completing his degree at WHU in 1997, the Schleswig-Holstein born alum embarked on a steep career path that took him to McKinsey and, after a detour into the start-up scene, to KKR, a leading global investment firm and significant private equity investor in Europe. In recent years, KKR has invested an average of $12billion per year in European companies or infrastructure projects. From its London office, the WHU alumnus, as Partner and Co-Head of European Private Equity, is responsible for major investments and shareholdings across Europe. In addition, he serves on the KKR European Private Equity and Growth Equity Investment Committee and the European Portfolio Management Committee. In 2009, Philipp Freise was named a Young Global Leader by the World Economic Forum and, in 2014, was appointed to the Agenda Council on the Future of Financing and Capital.

Philipp Freise is also highly active in cultural affairs outside of work. Since 2014, he has been a member of the Board of Trustees of the Friends of Bayreuth and, in July, on the 150th anniversary of the Bayreuth Festival, he will assume the Board’s chairmanship.

Dear Philipp, you joined KKR in 2001. Why the private equity industry?

It was just a coincidence. In 1998, while at McKinsey in New York, I worked for one summer on a project for KKR in Wuppertal. At that time, I got to know KKR’s leadership and the firm well. I found the people exciting and the challenges very diverse and interesting. Afterwards, I first founded my own company with Venture Park, but after two years that phase was over, and I was looking for something new. That is how I came back to KKR, which at the time was itself a start-up in London. We were around ten people in London and forty worldwide, so in a way, it was a continuation of the two founder years in Berlin.

What role do start-ups play in KKR’s investment portfolio today?

For about ten years, we have had a growth fund that, for example, has invested in the Berlin-based start-up GetYourGuide. With these funds, however, KKR does not invest in start-ups from the very beginning; it invests only once they have reached a certain size, with a focus on scaling. In our European private equity fund, I am currently involved with the aerospace company OHB, which is ultimately also a kind of German start-up. Admittedly, some time has passed since its founding, but OHB is one of the fastest-growing companies in our portfolio.

At the moment, global geopolitical power structures are shifting. What role does this play for your investment strategy, and which regions are becoming more attractive or less attractive for you as a result?

One thing generally applies to my industry: when there is a lot of turbulence and volatility, we are needed the most. We are partners with companies and help them navigate difficult situations.

We observe that our investors increasingly want to invest in safe regions such as Europe. From my perspective, Europe will emerge as a winner from these major changes. The region currently accounts for around one quarter of our global investment volume. In ten years, however, the continent is likely to represent an even larger share of our overall business than it does today.

Demand for our industry, meaning from the corporate side, still lags behind relative to GDP in Europe compared to the United States. In the future, however, we will see this gap continue to close. Dynamics will therefore also increase there.

What role do topics such as corporate culture, transformation, and responsibility play today compared with earlier stages of your career?

Corporate culture and responsibility are far more important today than they were ten years ago. When we invest in companies and, if we can, take them private, management is, by definition, more sustainable, responsible, and leadership-oriented because it becomes the owner of the company. However, the circle of owners is much broader today than it was ten years ago. This concept of broad-based employee ownership was first applied by KKR, and with great success. This year, we are celebrating our fiftieth anniversary. When we invest in companies today, we not only make management co-owners, but also large parts of the workforce.

This is where the circle closes. As a student, I wrote two papers and my thesis under Professor Horst Albach, my thesis supervisor at WHU, on so-called principal-agent conflicts between company owners and employees. In 1997, my thesis examined virtual corporate governance and argued that ownership is an instrument for leadership in highly dynamic environments. As a twenty-four-year-old student, I would never have imagined that this topic would still be so relevant almost thirty years later.

Your studies at the time with Professors Horst Albach, Klaus Rose, and Michael Frenkel in the tenth cohort of WHU were therefore already shaped by vision and foresight. What advice do you have for current and prospective students who want to try their luck in the private equity industry?

I have three pieces of advice. First, do not study too narrowly, but broaden your perspective. The Studium Generale was the best thing that could have happened to me. It is about learning how to think. Take the currently dominant topic of artificial intelligence, for example. What are the questions I need to ask AI in one, two, or three years? And how do I ask those questions? Understanding this is extremely important.

Second, I remember my father always telling me to learn languages and get to know different cultures. In ten years, those working in Paris, Madrid, Frankfurt, Milan, or Stockholm will have a better chance of making a career in private equity than those working in an English-speaking environment, such as London, and speaking only one language.

And the third thing that certainly helped me is flexibility and perseverance, qualities that are also part of studying at WHU. The fact that I founded a company myself was also invaluable. After that, nothing really shakes you anymore.

That is an experience you gained as a founder. Which others?

Persevering, leading, and being able to laugh despite everything. But in general, I would advise others to first find out what they are truly passionate about. Anyone who says from the outset, “I want to work in private equity one day and will now only learn the things that somehow predestine me for that” will not succeed. Above all, because no one knows what the professional world will look like in ten years.

Thanks for the chat, and we wish you a lot of success for the future.

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