KKR to join growing band of impact investors

The firm joins the likes of Bain, TPG and Goldman Sachs in targeting social and environmental impact with the registration of KKR Global Impact Fund.

KKR has become the latest blue-chip firm to eye the impact investing market.

The New York-based firm is planning to launch its own impact investing fund, according to a source familiar with the matter. On 7 February the firm registered KKR Global Impact Fund in Luxembourg, according to registry documents.

It is unclear how much the firm is targeting.

KKR has a track record of backing new strategies with its own capital. The firm committed $3 billion of balance sheet capital to its long-term Core Investment strategy, which closed on $8.5 billion in the fourth quarter of last year, according to its latest annual results.

It joins a growing group of private equity shops that have either raised or are raising capital for impact investments. TPG’s debut impact vehicle, The Rise Fund, hit its $2 billion hard-cap at the beginning of October.

Goldman Sachs Asset Management has its Impact Private Equity Managers, which seeks to build a core portfolio of global managers targeting a range of environmental themes such as clean infrastructure, healthcare and education, according to a December document from North Carolina State University Foundation. Goldman acquired the assets of ESG and impact investing investment adviser Imprint Capital Advisors in 2015. It is not clear how much capital the firm has raised for the strategy and it declined to comment for this article.

Bain Capital raised $390 million for its Double Impact Fund last year, having tapped former Massachusetts governor Deval Patrick to lead the unit in 2015. Patrick told PEI in January the size of the impact investing field was limitless.

“There will be more and more institutional name brand firms moving in this direction because there’s more and more demand from investors for these kind of products,” he said. “I think a lot of it will depend on our continuing to show that you don’t have to trade return for impact.”

Private equity-focused fund managers were expected to raise $5.3 billion for impact strategies last year, according to research from the Global Impact Investing Network in November. This compares with the $1.5 billion raised for impact investments by private equity firms in 2016.

Demand for impact funds is being driven in part by the gradual maturation of ultra-high-net-worth millennials who are beginning to take a more active role in the management of their family assets, according to the UBS/Campden Wealth Global Family Office Report 2017. Around 28 percent of family offices are engaged in impact investing, with 40 percent expecting to increase their allocations to the sector, the report noted.

KKR declined to comment.