KKR closes North America fund on $9bn

Kohlberg Kravis Roberts has closed its North America Fund XI on $9 billion, the firm said during an earnings call Thursday. The fund had a $10 billion target. 

Including Fund XI, KKR raised more than $21 billion of new capital in 2013, holding final closes for its debut Real Estate Americas Fund on $1.5 billion and its Special Situations Fund on $2 billion. While the firm’s debut special situations fund represents its first commingled vehicle for this segment, the fund does not represent a new strategy for KKR.

“We’ve actually been managing what I would call ‘fund of one’s’ for states, institutional [investors] or sovereign wealth investors, where they gave us committed capital in a private equity-like structure,” KKR chief financial officer Bill Janetschek said during the call. “Those were pretty big checks. We could raise another mandate with a big institution.” 

KKR is still in market with its energy and income growth fund – a first time strategy for the firm – which has raised $1.4 billion and is expected to hold a final close “in the course of the next several months,” Scott Nuttall, head of KKR’s global capital and asset management group, said during the call.

KKR was also active on the investment front during the fourth quarter, investing more than $2 billion from its private markets segment, 85 percent of which went into private equity deals in the US and Asia. The firm has invested an additional $2.5 billion of equity capital in announced deals that have yet to close.

“Since the beginning of 2013 we invested or committed $8 billion in private markets, more than 2.5 times the $3 billion we invested for all of 2012,” Nuttall said.  

“In public markets, if you look at the gross assets invested across all of our accounts – special situations, mezzanine and direct lending – we deployed $1.5 billion of capital in the quarter and over $4 billion in 2013.” 

KKR’s mezzanine and direct lending funds generated gross IRRs of 23 percent in 2013, Nuttall said.

In terms of realisations, KKR participated in 30 liquidity events last year, distributing more than $9 billion to its fund investors, with $3 billion distributed in the fourth quarter.

“This is the second year in a row we’ve realised over $9 billion dollars,” Nuttall said. 

The value of KKR’s private equity portfolio increased 8.5 percent during the fourth quarter and rose more than 20 percent during the full year 2013, according to the firm. 

Total distributable earnings for the year were about $1.45 billion, up from $1.44 billion in 2012, the firm reported. 

At the end of 2013, KKR’s private markets economic net income, a measure that includes both realised and unrealised investments, stood at $953 million, having risen 14.5 percent year over year. 

“We ended fourth quarter with assets under management of $94 billion, up 5 percent from last quarter and up 25 percent on a year over year basis,” Janetschek said. 

KKR’s shares were trading at $23.79 as of mid-day Thursday, up 33.8 percent from a year ago.