One of the titans of private equity is now also a top debt underwriter.

KKR & Co. muscled into the top 10 arrangers of new U.S. buyout loans last year, jumping ahead of rivals including Morgan Stanley, JPMorgan Chase & Co. and UBS Group AG, according to data compiled by Bloomberg.

Its rise in the lucrative business of arranging the debt is particularity stunning because it was so quick: Until 2017, the firm didn’t even make the cut into the top 20 underwriters for such deals.

Often dismissed by bankers as winning work mostly on its own deals and not often in the lead role, KKR says more than half of the debt deals it manages are now done for third parties. Its rapid ascent is the latest example of how non-bank entities are transforming the lending business worldwide.

“Had we attempted to do this years ago people would have said no,” Cade Thompson, KKR’s head of U.S. debt capital markets, said in an interview. “Fast forward to now and we have created a strong level of confidence about us leading transactions given our track record.”

KKR is also expanding the business internationally and hoping to replicate its debt market success in equity underwriting. The firm’s ascent has come as other established players such as Jefferies Financial Group Inc. and Royal Bank of Canada lost market share in new buyout lending in 2019, the data show.

Yet large investment banks such as Goldman Sachs Group Inc. and JPMorgan have a wider lead over KKR when looking at loans arranged for private equity firms more broadly, which includes refinancing and debt-funded dividends. KKR also lacks a sales and trading desk to support clients’ secondary market activities and doesn’t plan to build one.

“We’re an active book-runner on almost every KKR deal and more recently we’ve been mandated by other sponsors to join their syndicates,” said Adam Smith, the head of KKR Capital Markets, at an event hosted by Bloomberg in November.

KKR took the lead role on a dozen risky debt offerings in 2019 alone, partially by courting a large base of institutional investors who have been clients of the firm since its founding. It’s also been appealing to rivals like Silver Lake Partners to become one of the Menlo Park, California-based firm’s underwriters of choice.

KKR and larger rivals like Blackstone Group Inc. and Apollo Global Management Inc. can each spend between $800 million and $1.5 billion annually on sales advice, debt deals and equity underwriting fees, people familiar with the firms’ budgets said. Some at the private equity shops believe working with each other more can help cut down those costs.

One dealmaker at Carlyle Group Inc. said they prefer working with KKR’s capital markets group because the teams know each other well, having frequently discussed takeover opportunities together. The person asked not to be identified talking about rivalries. Carlyle has its own capital markets division, and can appeal to KKR to become an underwriter on its debt deals as well. Blackstone has also been expanding a capital markets unit.

The debt portion of KKR’s business has been expanding for years, sometimes getting mandates because banks shy away from writing risky buyout debt checks in times of stress. KKR has sometimes won work by being able to put more of its own money in speculative deals. Smith said at the conference that his firm has “the largest BDC complex in the world so we’re one of the few people that can write an extremely large check in private credit.”

In October, KKR led a $400 million loan offering that helped finance its buyout of Campbell Soup Co.’s international operations. It was the first time the firm took the left spot on a broadly syndicated financing for one of its own LBOs. The so-called “lead-left” role is the most coveted in underwriting because it implies the most responsibility, and often the greatest share of fees.

Arranging debt offerings has been a key component of KKR’s decade-long effort to build a full-fledged capital markets division. In the equity markets, it has long been a secondary underwriter on deals that involved its own firms but surprised some dealmakers last year when it took on a more high-profile position.

Smith hired David Bauer from Goldman to help boost the equities portion of his business and noted that KKR is the single largest firm of its kind to sell stock of its portfolio companies over the last decade. That’s amounted to $120 billion worth of deals.

“The public markets are an important component in how we exit our businesses,” Smith said.

It was the second underwriter behind Goldman on an initial public offering attempt by Endeavor Group Holdings Inc. — a company it had a prior relationship with. It paired with the talent agency in 2016 to acquire UFC, along with Michael Dell’s investment vehicle and Silver Lake. For KKR, it was the biggest-ever role it had on an IPO, even though the offering was ultimately pulled.

There are limitations to KKR’s ambitions. The firm isn’t among the top 100 equity underwriters globally, according to data compiled by Bloomberg. While it’s not planning on building out a sales and trading arm, it does have a stable of limited partners it can tap as it seeks to distribute equity of newly listed firms.

“We’re really focused on building an internal capability that is a market-facing team that speaks directly to investors, allows us to create our own capital markets judgment about what the companies want, what the market wants, and how to bridge those gaps,” Smith said. “The perspective we bring is one of the owner of companies.”