KKR’s Next North American Fund Won’t Reach $18 Bln

KKR plans to kick-off marketing for its next mega fund sometime in 2011 but don’t expect the pool to reach $18 billion, says Alex Navab, co-head of the firm’s North American private equity practice.

Navab, who was speaking with me Thursday at the Buyouts Conference in Dallas, says the firm is seeing “enthusiastic support” for KKR’s planned fundraising.

Navab, in a Q&A with me, wouldn’t give a size for KKR’s expected pool but the firm will raise a large fund. “I don’t think $18 billion will be realistic in this environment,” he says. KKR’s last North American fund raised $17.6 billion in 2006 and is about 70% invested.

On Wednesday, Tony James, COO of The Blackstone Group, said that his firm will close its latest mega fund near $15 billion, up from the previously disclosed $13.5 billion.

Since we were in Texas, I also asked Navab about Energy Future Holdings, the former TXU, which was acquired by KKR and TPG for $45 billion in 2007. The company recently took a third quarter $4.1 billion charge, which was its second multi-billion write-down. In February 2009, Dallas-based Energy Future Holdings announced an $8.9 billion write-down.

Navab says he’s taking a “long-term view” of the company and wishes natural gas prices were trading higher. The company has no covenant issues and “is a buyout work in progress,” he says.