KKR to deploy $14.2bn in dry powder

Kohlberg Kravis Roberts has about $14.2 billion in dry powder ready to invest and is seeing a significant amount of opportunities across its various investment strategies.

About $5 billion of the firm’s uncalled commitments are in KKR’s 2006 buyout fund, which closed on $16.5 billion. The firm will not start fundraising for a North American-based fund for at least several quarters, said Scott Nuttall, who heads the firm’s global capital markets and asset management group.

“We do believe we have enough capital to conduct our business in private equity in North America,” Nuttall said during a quarterly earnings call Friday.

The firm also doesn’t believe it needs to return a significant amount of capital to investors in the 2006 before embarking on new fundraising, he said.

“You tend to raise a successor fund before returning a lot of capital from the previous fund,” he said. “We don’t think we have to return X before we can go start the next fundraising.”

KKR continues to raise capital for other funds, including a mezzanine fund, which held a first close on an undisclosed amount in the first quarter. The firm raised a total of $415 million for its mezzanine, oil and gas and capital markets strategies funds, Nuttall said.

Over the quarter, KKR also collected about $250 million for its real assets funds, which includes infrastructure and natural resources, Nuttall said.

KKR invested about $1 billion across five transactions in the first quarter, and has another $800 million committed to five deals that have been announced but have not yet closed, Nuttall said.

“We’re seeing significant opportunities to deploy capital, but we’re being careful and selective as valuations have increased,” Nuttall said.

KKR’s assets under management increased $2.1 billion to $40.9 billion in the first quarter from $38.8 billion in the reporting period that ended 31 December. The increase was due “primarily” to a rise in the fair value of the firm’s private equity portfolio.

The firm earned less in fees in the first quarter, collecting about $56.2 million, compared to the fourth quarter of 2009, when the firm brought in $69.2 million. The decrease occurred in part because KKR collected a $46.1 million termination payment on a monitoring agreement with a portfolio company in the fourth quarter, which boosted fee earning income in that quarter by about $28.6 million.