KKR exceeds $17bn of dry powder for PE

The firm remained active on the fundraising and investment front in Q3, collecting $800m for its latest North American buyout fund and deploying $1.5 billion in private equity deals.

Kohlberg Kravis Roberts is coming off a strong quarter for fundraising.

The firm’s private markets business raised $4.7 billion during the third quarter of 2013, including $800 million of additional capital for its North America Fund XI, bringing the fund’s total to $8.3 billion, according to an earnings call Thursday. The fund has a $10 billion target. 

KKR also collected $1.4 billion for its energy and income growth fund – a first time strategy for the firm – and $200 million for its debut real estate vehicle, which now stands at $900 million. 

“When you look at the buying power of our Asia II, North America XI, China Growth and Europe III funds, it equates to a $21 billion global private equity fund,” Scott Nuttall, head of KKR’s global capital and asset management group, said during the earnings call. “Across all of our private equity funds and co-investment vehicles, we now have over $17 billion in dry powder.”

KKR was also active on the investment front during the third quarter, investing about $1.5 billion of private equity capital. Large North American deals include the firm’s $3.9 billion acquisition of industrial parts manufacturer Gardner Denver, the $1.3 billion buyout of clinical-research firm PRA International and a minority stake purchase of 4.75 million shares in oil field digitalisation company RigNet from Nordic private equity firm Cubera.

The firm also has an additional $2.5 billion of equity committed to deals that have yet to close.

“We’ve seen broad based activity across Asia, Europe and the US,” Nuttall said. 

KKR’s two most recent deals from its North America fund, the acquisition of engineering services company The Crosby Group and Acco Material Handling Solutions from Melrose Industries for approximately $1 billion and the buyout of insurance technology provider Mitchell International for $1.1 billion, will bring the fund to roughly 30 percent invested, Nuttall said.

In terms of realisations, KKR returned $6 billion to investors during the first three quarters of 2013.

Total distributable earnings for the first nine months of the year were about $946 million, up from $903 million for the first nine months of last year, the firm reported.

The value of KKR’s private equity portfolio increased 5.9 percent during the quarter and has risen 12.5 percent through the first nine months of 2013, according to the firm. 

One of the few categories in which KKR saw a decline was economic net income – a measure of earnings that includes realised and unrealised investments – which stood at $1.4 billion as of 30 September, compared to 1.8 billion during the same period in 2012. Third quarter ENI was about $614 million, representing a 20 percent increase from the same period last year.