KKR & Co. L.P. (KKR) Makes Large Investment in Savant Systems, Home Automation

KKR & Co. L.P. (NYSE:KKR) is making a big investment in the future of the burgeoning smart home market by claiming a 35% minority stake in home automation company Savant Systems for $90 million, a deal which values the company at $215 million. While Savant has traditionally catered to the wealthy, KKR & Co. L.P. (NYSE:KKR) is jumping on board at a time when the company is gearing up to enter the mass market, as detailed today on The Street’s The Deal.

 “They’ve got a new product introduction that they’ve rolled out earlier this year, that takes their applications down to a more moderate income stream. Previously it had been reserved for people who had mansions and yachts. Now it’s being targeted to the average homeowner, for as little as $1,000,” said Bob O’Brien, Senior Writer for The Deal.

Savant’s systems have typically started at around $20,000, and are configured to connect just about anything desired within the home to the owner’s smartphone for mobile use; be it lights, lawn sprinklers, appliances, heating and cooling controls, electronics, the alarm system, or more. However, as O’Brien detailed, Savant is in the process of releasing a new product which brings this connectivity to the mass market from as little as $1,000 to $3,000.

Savant has experienced exceptional growth over the past few years, despite catering to only a small segment of the market. Their annual compound growth rate has been 20% for several years running according to O’Brien, and that figures to continue  or even accelerate given the rapid expected growth of the smart home market, which is expected to triple in revenue by 2018, as well as their own greater expansion into the market, all of which were likely very compelling factors for KKR & Co. L.P. (NYSE:KKR).

It’s been a busy couple of weeks for KKR & Co. L.P. (NYSE:KKR). The private equity firm invested $400 million in Chinese chicken producer Fujian Sunner Development last week, then sold $90 million and $769.5 million stakes in China Modern Dairy Holdings Limited and Versatel GmbH respectively.

The markets have yet to react favorably to the flurry of moves. KKR & Co. L.P. (NYSE:KKR) is down 4% for the week to trade at $22.68 in afternoon trading today.

Disclosure: none