KKR plans first close on Infrastructure II in the fall

Firm: Kohlberg Kravis Roberts

Fund: KKR Global Infrastructure Investors Fund II

Target: $1.5 billion to $2 billion

KKR Global Infrastructure Investors Fund II is targeting $1.5 billion to $2 billion, according to Leicestershire County Council documents.

The fund is offering substantial discounts on fees to limited partners that commit prior to the first close, sources said. KKR will charge a 1 percent management fee and 10 percent carried interest over an 8 percent performance hurdle for first close investors, with carry increasing to 15 percent for LPs who come in afterward. Transaction and monitoring fees will be offset from the management fee. The fund also features a minimum general partner commitment of 5 percent, according to Leicestershire County Council documents.

Leicestershire, which is also an LP in KKR’s first infrastructure fund, approved a $30 million commitment to the vehicle earlier this year.

Fund II’s investment strategy is said to be similar to that of the predecessor fund, which allowed for investments in midstream and renewable energy, utilities, social infrastructure and transportation-related infrastructure. Fund I closed on slightly more than $1 billion in 2012 and was roughly 75 percent invested as of May.

In June, KKR used the fund to acquire a one third stake in ACCIONA Energía’s renewable energy business for 417 million euros ($559.9 million). KKR also has used the vehicle for its investment in Saba Infraestructuras, a European car park operator, as well as for its joint venture United Water, which secured a 40-year water and wastewater concession from Bayonne, New Jersey, in 2012.

The fund had generated a 1.1x total value multiple as of Dec. 31, according to Maine Public Employees Retirement System documents. The fund has also yielded $34 million since inception, said William Janetschek, KKR’s chief financial officer, during a second quarter earnings call in July.

“Our Infrastructure I fund has performed quite nicely,” said Scott Nuttall, KKR’s head of global capital and asset management, during the call.

Maine Public Employees committed $200 million to Fund II at its April meeting. On July 28, Arkansas Teacher Retirement System approved a $50 million commitment to the fund.