KKR closes $1bn China fund

Kohlberg Kravis Roberts has held a final close on $1 billion on its China Growth Fund, part of about $5 billion the firm raised last year in new strategies outside traditional North American buyouts.

The firm launched the China Growth Fund last year, with a target of $800 million and a hard cap of $1 billion. The firm said during an earnings call Wednesday the fund had recently held a final close.

The China Growth Fund was one of several new strategies the firm has launched and for which KKR has raised capital in the last year, including natural resources, mezzanine and infrastructure. Of the $5 billion the firm raised in 2010, 40 percent came from new limited partners, the firm said.

“We’re having some success and [that was] without a flagship private equity fund in the market,” Scott Nuttall, head of KKR’s global capital and asset management group, talking about 2010. “We are spending more time with sovereign wealth funds around the world and getting some real traction. We’re seeing them increasing their allocations to alternatives both in Asia, the Middle East, and even parts of Europe.”

The firm had raised $558 million for its mezzanine fund by year’s end, and $515 million for its infrastructure fund, according to the earnings report.

Earlier this year, KKR launched its eleventh North American fund targeting between $8 billion and $10 billion and with no hard cap. The firm expects to be raising Fund XI for a year, and has offered LPs a bigger share of the deal fee in exchange for paying a higher management fee.

KKR’s economic net income, a measure private equity firms use to report earnings, was $2.1 billion for 2010, a 9.5 percent increase from $1.9 billion in 2009. The increases were driven primarily by appreciating values across the firm’s asset classes, including private equity.

The private equity funds returned 33 percent for the year, the firm reported.