KKR Builds Infrastructure Practice

KKR this morning announced that it has formed a global infrastructure practice, which had been a poorly-kept secret since word leaked last month that the firm had hired Lazard infrastructure chief George Bilicic.

There have been some suggestions that the group might be looking to raise upwards of $10 billion for the effort, but there also have been suggestions that Doc Rivers deserved Coach of the Year consideration. As we’ve learned over the past few weeks, suggestions are prone to be silly.

KKR hasn’t actually put a target on its infrastructure fund plans, but a safer figure would be around $5 billion. After all, you don’t raise $10 billion for infrastructure when your general buyout fund is “just” $17 billion.

Also worth noting that terms on the infrastructure fund would probably be more LP-friendly than on the general fund, since infrastructure deals generally have a lower return profile than do leveraged buyouts. That leads me to…

As we reported yesterday, The Blackstone Group is also considering the launch of a dedicated infrastructure fund. It’s one of several sector-specific options on the table, including energy and financial services.

Blackstone has been floating the idea to limited partners as it raises its seventh general fund, which is scheduled to hold an $8 billion first close on June 27. The idea is to tell LPs now, so they don’t feel blindsided if such a vehicle gets launched before the Fund VII investment cycle concludes. No final decisions have been made yet on whether or not to do this, let alone on sector, size or timing.

No official comment from Blackstone, natch.