Kolhberg Kravis Roberts is betting on European opportunities following an active quarter in which the firm invested roughly 30 percent of its capital in Europe, the firm said during an earnings call Thursday.
KKR is in the early days of its latest fundraising effort, targeting €3 billion for its fourth European fund, which has a €3.5 billion hard-cap.
“We think it’s a great time to be investing in Europe as the recovery continues,” Scott Nuttall, head of KKR’s global capital and asset management group, said during the call. “In European private equity, we’ve had strong results, with our portfolio up about 50 percent in 2012 and 25 percent in 2013 and off to a good start in 2014, outperforming the MSCI Europe by about 300 basis points in the first quarter.”
KKR was particularly active on the exit front during the first quarter, divesting through public markets, strategic sales and dividends, Nuttall added.
“In Q1 we took Pets at Home and Santander public. We also did secondaries at Jazz, Kion, Prosieben, NXP and Neilsen at a blended multiple of 2.4 times our cost,” he said. “These, combined with the strategic exits of Oriental Brewery, US Foods and Sunrise Senior Living will provide a strong pipeline of cash carry in the distribution over the next two quarters.”
KKR sealed its most recent exit Thursday by selling US medical device company Biomet for $13.35 billion alongside co-investors The Blackstone Group, GS Capital Partners and TPG Capital. KKR invested in the company in 2006 in a deal valued at $11.4 billion.
So far in 2014, the firm has inked roughly a dozen 12 realised or pending private equity divestments out of six different funds across the US, Asia and Europe.
On the fundraising front, KKR held a final close for its first Energy Income and Growth Fund last month, raising about $2 billion, including a general partner commitment.
The value of KKR’s private equity portfolio increased 4.5 percent during the fourth quarter.Total distributable earnings for the quarter were about $447 million, up from roughly $291 million in the first quarter of 2013, the firm reported.
KKR’s economic net income, a measure that includes both realised and unrealised investments, stood at $630 million, having fallen about 2.7 percent year over year. The firm’s total assets under management rose to $102.3 billion at the end of the first quarter, up from $94.3 billion at the end of Q1 2013.
KKR’s shares were trading at $24.27 as of mid-day Thursday, up from $20.19 a year ago.