KKR recoups roughly 80 pct of Capsugel investment in less than three years: UPDATED

oceancaps

KKR appears to be doing pretty well on its investment in Capsugel.

The New York firm has made back roughly 80 percent of its investment in the capsule maker. Capsugel is refinancing a $1 billion loan that will be used to finance a $400 million dividend payment to KKR, Thomson Reuters Loan Pricing Corp reported Tuesday.

Capsugel also paid out a $450 million dividend late last year, according to a source. The company used $465 million in senior PIK-toggle notes to fund that dividend, according to S&P Capital IQ Leveraged Commentary & Data.

KKR, in the past year, has received roughly $850 million in dividends from Capsugel. That is about four fifths of its investment.

Capsugel, of Morristown, New Jersey, makes and sells hard capsules. KKR acquired the company in August 2011 from Pfizer in a deal valued at nearly $2.38 billion. KKR invested slightly more than $1 billion of equity in Capsugel, the source said.

The Capsugel investment came from KKR’s 2006 flagship fund, which closed on $17.6 billion in 2008. KKR is currently investing its latest flagship fund, North America Fund XI (NAXI). NAXI closed on $9 billion, peHUB reported in February.

The 2006 fund is generating a 1.49x multiple and an 8.5 percent IRR as of March 31, according to performance information from the Oregon Public Employees Retirement Fund. Performance data for NAXI was unavailable.

UPDATE: KKR’s 2006 fund is generating a net IRR of 8.5 percent, a gross IRR of 11.3 percent, a 23.5 percent IRR on realized investments and 1.7x multiple of invested capital as of March 31, according to a 10Q filed in May.

Executives at Capsugel could not immediately be reached for comment.

Photo of OceanCap capsules courtesy of Capsugel

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