KKR nets 2.9x on Versatel

The exit comes as KKR continues to raise its European fund IV

Kohlberg Kravis Roberts has sold its stake in Versatel, a German data and internet provider, to United Internet for €1.25 billion.

The sale to United Internet, which already owned 25.1 percent of the business, has netted KKR a gross return of 2.9x and a 40 percent gross internal rate of return, according to a source close to the matter.

KKR declined to comment on returns.

KKR originally invested in Versatel in July 2011, when it took the company private. Under KKR’s ownership, the business has developed into a leading alternative fibre operator in Germany, according to the firm.

“Our investment in Versatel has been driven by the conviction that the data revolution creates a large structural investment opportunity,” Henrik Kraft, member and head of KKR Europe’s technology and telecommunications team, said in the statement. “The demand in bandwidth for business-to-business purposes and the need to connect mobile base stations with fibre are growing rapidly.”

The deal remains subject to the usual customary closing conditions and regulatory approvals.

The investment in Versatel was made by KKR’s Europe Fund III, a $6.70 billion 2008-vintage. KKR has exited a number of investments from this fund this year. In March KKR sold Avencis, a helicopter business it owned alongside Investindustrial, for €2 billion, netting KKR a return of close to 2.5x, a source told PEI at the time. In March, it also sold music rights management company BMG. In the same month, it listed Pets at Home on the London Stock Exchange.

KKR will be keen to return capital to investors as it is currently in market to raise its next European fund, KKR European Fund IV. The Washington State Investment Board made an investment recommendation to that vehicle during a board meeting in June, according to a filing on the pension fund’s website. The precise target of the fund was undisclosed.