KKR North America Fund headed toward $12 bln hard cap

Kohlberg Kravis Roberts & Co expects to hit its $12 billion cap for its flagship North America Fund XII, not including GP and employee commitments, as the firm continued drawing in fresh capital during the first quarter.

Scott Nuttall, global head of capital and asset management, on April 25 said the firm expected the fund to top out at $12.5 billion to $13 billion with contributions from insiders at the firm, according to a transcript of the firm’s first-quarter-earnings call.

Previously, KKR said North American Fund XII would be larger than its predecessor, North America Fund XI, or NAXI, which drew in $9 billion in 2012. Earlier reports put the size of Fund XII at $10 billion or more.

At $12 billion, the fund would rank second among the dozens of pools raised by KKR, next to the nearly $18 billion in commitments for KKR 2006 Fund, according to fundraising totals disclosed by the firm.

All told, KKR said assets under management increased by $7 billion in the quarter behind fundraising in public and private markets. The firm had $35 billion of dry powder at the end of March.

But Nuttall described the first quarter as “volatile and strange” with weakness both in public equity and debt markets.

“Fundraising has progressed quickly, which we believe is due to NAXI’s strong performance and the continuing expansion of our client base,” Nuttall said on the conference call with Wall Street analysts. “We have held closes on several funds and feel good about our fundraising momentum across multiple products.”

The firm held an $850 million final close on KKR Lending Partners Europe, its first direct lending fund with a European mandate.

KKR Private Credit Opportunities Partners, or PCOP II, a successor to its mezzanine fund, held a closing. The firm also held an initial close on its KKR Next Generation Technology Growth Fund. It didn’t provide dollar figures for either of those.

It’s also drawing in capital for a media growth equity platform, but didn’t elaborate on any dollar figures or targets.

Also in the market are KKR Real Estate Partners Americas II, its second opportunistic real estate fund, and its KKR Real Estate Partners Europe, or REPE fund, as well as Global Direct Lending III.

Nuttall said KKR may talk about Asia private equity “at some point” in the coming year, “but it’s a bit early.” KKR reached a final close of $6 billion on Asian II Fund in 2013. At the time, it was the largest-ever pan-Asian private equity fund, the firm said.

Turning to its first-quarter results, KKR said its economic net loss of 65 cents a share fell short of the average analyst estimate of a loss of 35 cents a share. The loss reflected a drop of 0.9 percent in the value of its private equity portfolio and a 5.4 percent decline in investments off its balance sheet.

Action Item: KKR first-quarter results, http://bit.ly/1SIi4JS

Photo of Henry Kravis courtesy of Reuters/Carlo Allegri