Washington adds $250m to KKR commitment(2)

The State Investment Board has tacked another $250m to the $500m commitment it made to KKR North America XI in 2011, citing its need for ‘additional North American exposure’.

The Washington State Board of Investment approved a $250 million commitment to Kohlberg Kravis Roberts’ 11th North American Fund at its meeting Thursday bringing its total commitment to Fund XI to $750 million, a spokesperson told Private Equity International.

The board previously committed $500 million to KKR North America XI in February, 2011.

“It’s going to be a light year for fundraising, so we saw this as a way to get additional North American exposure with a long-term partner,” the spokesperson said.

Earlier this month, Private Equity International’s Research & Analytics division released data indicating that 512 North America-focused funds have or will come to market in the next year. Those funds are targeting approximately $190 billion in aggregate. 

Despite the additional $250 million, Washington’s overall commitment to Fund XI remains only half of what the $88.9 billion retirement system committed to KKR’s 2006 mega-fund, which was generating a 1.32x total value multiple and 7 percent internal rate of return as of 30 September, according to Oregon Public Employees Retirement Fund documents.

In an earnings call earlier this month, KKR announced that it had extended Fund XI’s fundraising period into the second half of 2013.

“We said last quarter that we ultimately think the fund will be between $7 billion and $8 billion. Given the extended fundraising timeline and the line of sight we have today, we feel very comfortable about hitting the high end of that range,” said head of KKR’s global capital and asset management group Scott Nuttall during the call.

KKR raised a total of $11 billion for its various investment vehicles in 2012, and has “documentation in hand” for more than $5 billion of commitments for its KKR Asia II fund – which Washington committed $400 million to last year – according to Nuttall. The firm is “confident we will achieve the hard-cap of $6 billion with a final close in the next 30 to 60 days,” he said.