KKR passes two thirds mark on Europe Fund IV

The first close comes as KKR is exploring a joint bid with CVC to acquire the lighting division of Philips

Kohlberg Kravis Roberts has held a first close of more than €2 billion on its European Fund IV, according to a source familiar with the matter.  

The closing, which was held last week, comes nine months after KKR started marketing the fund, the source added. 

The vehicle, which has a target of between €3 billion and €3.5 billion, will hold a final close later this year, it is understood.

KKR declined to comment on fundraising.

The firm is already eying investments from the new vehicle. KKR is currently exploring a joint bid with CVC Capital Partners to acquire Philips Lighting, a division of the Eindhoven-based technology company.

The negotiations are in a very early stage, it is understood. According to Dutch business paper Het Financieele Dagblad, the enterprise value for the corporate carve out could be €9.5 billion.

Last July, KKR acquired a majority stake in Aberdeen-based OEG Offshore Group, using capital from its balance sheet. It invited LPs that were committing to Europe Fund IV to co-invest in the deal.

KKR’s investment in Ringier, a Swiss media business, in July 2014, was the last investment from KKR’s €4.2 billion Europe Fund III, a 2008-vintage, which is now fully invested.

The first close comes after KKR secured a number of exits in recent months. Over the Christmas period, it sold a 55 percent stake in Alliance Boots to Walgreens Boots Alliance. The total return on the sale of that business was 3.9x.

In December, KKR also sold Fotolia, a European microstock photo provider, to US-listed Adobe for a total enterprise value of $800 million, netting KKR a 2x return and a 30 percent internal rate of return.

Following the sale of Fotolia, KKR’s Europe Fund III was more than 70 percent divested. In September, KKR sold its stake in Versatel, a German data and internet provider, to United Internet for €1.25 billion, while in July, it sold Wild Flavors to ADM netting a return of close to 3.5x. 

In March KKR sold Avincis, a helicopter business it owned alongside Investindustrial, for €2 billion, netting KKR a return of close to 2.5x. In the same month, it listed Pets at Home on the London Stock Exchange.