KKR raises nearly $600m for healthcare growth fund

KKR initially invested in healthcare through its balance sheet and subsequently included the healthcare assets in a secondaries transaction last year.

KKR has raised nearly $600 million for its debut healthcare growth fund, according to a Tuesday filing with the Securities and Exchange Commission.

The filing indicates that KKR Health Care Strategic Growth Fund has secured $334 million from third-party commitments and that total commitments – including from capital from KKR parallel vehicles, from the GP and from its affiliates – amount to $598.5 million.

KKR launched its first dedicated healthcare growth fund at the end of 2016 to pursue growth capital investment opportunities in the health care sector, primarily in the US. Bloomberg reported in September that the fund would target up to $800 million.

The firm noted in its latest 10-k filing with the SEC at the end of February that “although the specific areas in which the strategy will focus may evolve over time, we currently expect to pursue opportunities in healthcare companies, where our thesis will be predicated primarily on commercialising and scaling products and/or services with unmet needs and market viability”.

KKR initially began investing in healthcare growth companies from its balance sheet, according to comments from chief financial officer Bill Janetschek during the company’s second-quarter 2016 earnings conference call in July.

He noted then that some of these healthcare assets sitting on the balance sheet were part of two secondaries transactions totalling $400 million with two separate parties, which sister publication Secondaries Investor understands are Landmark Partners and Coller Capital.

Janetschek’s comments also implied that one of these investors may have also committed to the fund, although KKR declined to comment.

“To the extent that there was one particular investor that was interested in healthcare and technology, in addition to transaction with us based on the balance sheet assets, they also made a primary commitment to that strategy on a go-forward basis,” he said during the conference call in July.

Limited partners for the KKR Health Care Strategic Growth Fund include Cathay Financial Holding, which plans to invest $30 million, according to Reuters, citing a Chinese source on Monday.