Washington State commits $94m to KKR annex fund

The commitment to KKR E2 Investors will be offset by a $94m reduction in WSIB’s $700m committed to KKR European Fund III. The US pension also committed $150m to TA Associates' 11th fund, reportedly targeting $4bn.

The Washington State Investment Board has committed $150 million to TA Associates and $94 million to KKR E2 Investors, an annex fund to the firm's €4.5 billion second European fund.

The $94 million commitment to KKR European Fund II is a shifting of money from one fund to another, rather than a new commitment, according to a pension spokeswoman. The investment will be offset by a $94 million reduction in the pension’s $700 million commitment to KKR European Fund III, which is targeting €6 billion. The fund held a second close on €4.8 billion at the end of June and closed this year. KKR declined to reveal the final amount of the third European fund. 

KKR would not give a target for the annex fund. The firm will use the capital in the annex fund for add-on investments for “select” portfolio companies from the second European fund. The annex fund will be used “to help improve the capital structure” of some of the portfolio companies in the second European fund, and “take advantage of the dislocation in the capital market”, a person with knowledge of the situation said.

TA Associates is reportedly targeting $4 billion for its eleventh fund. The Massachusetts Pension Reserves Investment Management Board recently approved an $150 million commitment to the fund.

The $68 billion pension has roughly $13 billion committed to private equity and more than $9 billion to real estate. WSIB has a 25 percent target to private equity, one of the highest among US public pensions.

Washington State, like many other US pensions, has experienced a large drop in its value in the financial downturn, from $80.1 billion as of 30 June, 2008.