KKR sees $13 bln for Americas XII, with GP money

  • Firm expects to hits $12 bln hard cap, plus $1 bln from the firm
  • KKR expects to wrap up flagship fund in the second half
  • About 35 percent of LPs in Americas XII are new

Kohlberg Kravis Roberts & Co pledged to eat more of its own cooking, making the largest contribution yet to its private equity fund, as it looks to wrap up its 12th flagship fund at $13 billion in the second half.

KKR said it expected to hit the $12 billion hard cap for its Americas Fund XII from outside LPs, plus it’ll contribute about $1 billion from its balance sheet, which showed a book value of $9.1 billion as of June 30.

The New York firm reported $10.6 billion in commitments for the fund. KKR’s commitment to Americas XII currently accounts for about 9.5 percent of the pool, its largest contribution of any of its past private equity funds.

By comparison, the firm contributed 2.9 percent to North America Fund XI, the $8.7 billion predecessor to Americas Fund XII.

“We made a big commitment to the Americas XII fund,” Scott Nuttall, head of the global capital and asset management group, said on the firm’s conference call with Wall Street analysts. The firm expects to use more of its balance sheet in its funds.

“We will continue to use the balance sheet to seed … newer ideas and also to create more asset-management-type flow for us,” Nuttall said.

On the fundraising front, Nuttall said the firm currently has about 950 LPs across the firm, with about 1.7 products per LP. Its top 40 LPs average three to four products, with about a third of its LPs invested in more than one product.

Nuttall said KKR sees a “massive opportunity” to offer more than one product to two-thirds of its LP base, even as its number of investors continues to grow.

In terms of the number of LPs, about 35 percent of the LPs in Americas Fund XII are new to the firm, he said.

“A big part of the reason you’ve seen the fundraising success we have is we have been expanding the investor base across the firm,” he said.

KKR is also marketing its second real estate opportunistic fund and its private credit opportunities fund, which is its second mezzanine fund.

It’s also fundraising for its growth equity fund and real estate credit vehicles. Further ahead, it’ll fundraise for its Global Direct Lending III fund as well as its third Asia fund, among other initiatives.

Nuttall’s comments came as KKR reported second-quarter net income fell 92 percent to $279 million from $3.33 billion from the year-ago period on a drop in total investment income.

After-tax distributable earnings rose 9.1 percent to $507.6 million from $465.3 million. Total assets under management increased 14 percent to $131 billion.

Action Item: KKR’s Q2 results, http://bit.ly/2a5hbKM

Henry Kravis, co-founder of private-equity firm Kohlberg Kravis Roberts & Co, attends a media briefing in Hong Kong on September 16, 2013. Photo courtesy Reuters/Bobby Yip