KKR to raise up to $7 bln with new infra fund

  • New fund more than double size of Fund II
  • Funds I and II deals used $4.1 bln of co-investment
  • Recent deals include Calvin Capital and Genesis Energy

Kohlberg Kravis Roberts & Co is looking to raise up to $7 billion for its new infrastructure fund, an investment memo released by Minnesota State Board of Investment says.

At that size, KKR Global Infrastructure Partners III would be more than double the size of the $3 billion fund the firm raised in 2014.

Funds I and II, sized at $1 billion and $3 billion respectively, used $4.1 billion of co-investment capital to secure deals, according to the memo.

KKR’s capital markets business, which arranges debt and equity financing, has also helped the infrastructure team go after larger, more technically difficult transactions, KKR Co-President and Co-Chief Operating Officer Scott Nuttall said during a fourth-quarter earnings call.

Recent deals include the acquisition of Calvin Capital, which provides gas and electricity meters in the U.K., and a partnership with Houston-based midstream infrastructure business Genesis Energy.

“If you think about it, you had a $3 billion infrastructure [fund at Fund II], and if you can actually show that you can do multiple large transactions, that you need a lot more capital than $3 billion, it allows you to raise a much larger Fund III potentially because you have proof of concept that you can put that money to work,” Nuttall said.

Minnesota committed up to $150 million to Fund III. The firm declined comment.

KKR’s second infrastructure fund was netting a 14 percent internal rate of return with a 1.2x multiple through Sept. 30, according to the Minnesota memo. Fund I, a $1 billion 2011 vintage, was netting a 12.5 percent IRR and a 1.5x multiple as of that date.

KKR’s global infrastructure team is co-led by Raj Agrawal and Jesús Olmos, who work out of the firm’s Menlo Park, California, and London offices respectively.

Brandon Freiman manages the firm’s infrastructure efforts in the U.S. while Tara Davies, who joined the firm in 2016, oversees its European portfolio.

KKR was founded by Jerome Kohlberg, Henry Kravis and George Roberts in 1976. The firm had $168.5 billion under management as of the end of 2017.

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Henry Kravis of Kohlberg Kravis Roberts & Co. speaks during an interview in New York on April 3, 2012. REUTERS/Shannon Stapleton