WHITE MOUNTAINS INSURANCE GROUP LTD

Kudu provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance and legacy partner liquidity. Kudu also provides strategic assistance to investees from time to time. Kudu’s capital solutions generally are structured as noncontrolling equity interests in the form of revenue and earnings participation contracts (“Participation Contracts”) and designed to generate immediate cash yields.

During 2023, White Mountains committed an incremental $150 million of equity capital to Kudu, of which $61 million was undrawn as of December 31, 2024. Kudu expects to fund new capital deployments through the funds remaining from White Mountains’s capital commitment, excess operating cash flows, recycling of certain sales transaction proceeds, available debt capacity and additional equity contributions.

As of December 31, 2024 and 2023, White Mountains reported $1,108 million and $959 million of total assets and $792 million and $684 million of total equity related to Kudu. As of December 31, 2024 and 2023, White Mountains owned 90.4% and 89.6% of Kudu (77.0% and 76.3% on a fully-diluted/fully-converted basis, taking account of management’s equity incentives) and reported $128 million and $114 million of noncontrolling interests related to Kudu.

Portfolio

As of December 31, 2024, Kudu had deployed $989 million, including transaction costs, into 27 asset and wealth management firms globally, including three that have exited the portfolio. As of December 31, 2024, Kudu’s asset and wealth management firms had combined assets under management of approximately $125 billion, spanning a range of asset classes including real estate, wealth management, hedge funds, private equity and alternative credit strategies. Kudu’s capital was deployed at an average gross cash yield at inception of 9.6% based on expected cash in the first year following deployment.

Kudu’s philosophy is to partner with asset and wealth management firms that exhibit strong cash flow generation and growth. Kudu seeks to provide its solutions across a diverse mix of investment strategies and asset classes in the middle market.

Kudu’s average capital deployment to date has been approximately $37 million, with a range from $14 million to $81 million. Apportioned by manager type, Kudu’s portfolio as of December 31, 2024 was deployed 43% in alternatives, 32% in private capital, 17% in wealth management and 8% in traditional asset management. Kudu prioritizes the private capital segment as the underlying clients of these firms tend to be locked-up for an extended period, which can provide stability of revenues in a potential market downturn.

Kudu seeks to diversify geographically. Its portfolio currently includes 19 firms headquartered in 11 different states in the United States, three in the United Kingdom, two in Australia and one in Canada.