In New Twist, Private Equity Shares Its Windfall With Hourly Employees

Yes, KKR & Co. made a roughly $4 billion profit from its eight-year investment in manufacturer Ingersoll Rand, which it exited this month. But in a new twist for the private-equity firm, it gave the Davidson, North Carolina-based company’s 16,000 workers a heaping taste of the windfall -- $500 million.

To Pete Stavros, KKR’s co-head of Americas private equity, it’s a validation of the model he helped champion within the alternative asset manager. He’s the architect of the firm’s employee engagement strategy, which gives workers -- many of whom receive an hourly wage -- an ownership stake in their company.

“This would be among the more profitable deals we’ve done,” Stavros, 47, said in a telephone interview. “Especially when you take it in totality -- not just dollar gains -- but what it has meant for employee ownership, safety, engagement, diversity and the environment.”

For outside observers, it’s yet another way that powerhouse private-equity firms have softened their approach. Apollo Global Management Inc. is fundraising for its first-ever social responsibility fund, while General Atlantic and TPG are bringing in billions of dollars to make investments that combat climate change. KKR’s employee engagement initiative is separate from its own burgeoning impact strategy.

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