KKR & Co. has agreed to acquire Arctos Partners for $1.4 billion, with the potential for up to an additional $550 million in future equity tied to KKR’s share price and business-specific performance targets.

The initial consideration includes $300 million in cash, $900 million of equity issued to existing Arctos shareholders, subject to vesting through 2030 for management, and an additional $200 million of equity to be allocated by 2028 and vest through 2033. The contingent equity component vests through 2031.

Founded in 2019 by Ian Charles and Doc O’Connor, Arctos is the largest institutional investor in professional sports franchise stakes and the only firm approved for multiteam ownership across all five major U.S. leagues. The firm manages approximately $15 billion in assets through its Arctos Sports and Arctos Keystone (GP Solutions) platforms.

“We see tremendous opportunity to better serve the sports industry and the sponsor community, but the key to that unlock is a partnership that will provide access to strategic, financial and operational resources to accelerate our existing businesses,” said Ian Charles and Doc O’Connor, managing partners of Arctos.

“Arctos has created a distinctive and scaled platform across sports investing and capital solutions for asset managers, and the team has extensive experience in secondaries—three areas where we see significant long-term opportunity,” said Joe Bae and Scott Nuttall, co-CEOs of KKR.

Following the transaction, perpetual and long-dated capital is expected to represent 53% of KKR’s $759 billion in AUM. Upon closing, Charles and O’Connor will join KKR as partners, and Arctos will form the foundation of a new investing business, KKR Solutions, led by Charles.