KKR Sees Infrastructure Ahead

NEW YORK, Aug 13 (Reuters) – Private equity firm Kohlberg Kravis Roberts & Co [KKR.UL] said on Wednesday it expects to make investments in infrastructure assets such as energy, waste, transportation and telecommunications.

KKR said last month when it announced plans to list on the New York Stock Exchange that it plans to expand into areas such as mezzanine financing, real estate and infrastructure.

In a filing on Wednesday with the U.S. Securities and Exchange Commission, it gave more details about those plans.

KKR said it expected the infrastructure investments would be made through buying equity and debt, and it would generally seek to take majority ownership in assets or companies.

“Investments are expected to focus on energy, waste and wastewater, transportation and telecommunications assets, but may also include social infrastructure and infrastructure-related assets,” it said in the filing.

While the focus will be on the mostly industrialized market economies of the OECD — the Organization for Economic Cooperation and Development — it will consider countries such as India and China. KKR first announced the push into infrastructure in May when it hired George Bilicic from Lazard to run the initiative.

KKR said the expansion into mezzanine financing would also be on a global basis.

“We intend to conduct our mezzanine operations globally, focusing on making privately negotiated investments in the mezzanine securities of large global companies,” it said in the filing.

Mezzanine has gained new luster as private equity firms find it harder to access the easier, cheaper lending options that they had relied on.

This debt, typically exchanged for double-digit interest rates and a chunk of equity through warrants, is more expensive because it's unsecured and carries more risk should a company go bankrupt.

Also in the filing, KKR said it made cash and in-kind distributions of $1.3 billion to its owners.

The company also said it made $106.3 million in distributions for the three months ended March 31.

The company, which had about 500 employees as of March 31, last month said it would become a publicly traded company on the New York Stock Exchange. The company plans to acquire its Amsterdam-listed investment fund and relist the new company in New York.

By Megan Davies
(Additional reporting by Jessica Hall in New York; Editing by Brian Moss)