KKR prepares for fundraising spree

Scott Nuttall, the firm’s co-president and co-COO alongside former Asia head Joe Bae, told analysts on an earnings call that the latest Asian private equity, Americas private equity and infrastructure funds would be launched over a period of six to 18 months.

KKR’s third Asia vehicle closed at $9.3 billion in June 2017, up from $6 billion in the previous vintage. This followed a final close of $13.9 billion on KKR Americas XII Fund – its North America-only predecessor had a corpus of $9 billion – while the third global infrastructure fund closed on $7.4 billion in September 2018, more than doubling the $3.1 billion raised for Fund II.

Nuttall also emphasized how much of KKR’s asset growth has come beyond private equity. PE capital raised on a three-year trailing basis rose from $8 billion in 2012 to a peak of $30 billion in December 2018, driven by the three flagship regional funds. Over the same period, non-PE money went from $9 billion to $71 billion and now stands at $73 billion.

He noted that 18 of KKR’s 22 strategies launched in the last decade and it takes about 10 years to achieve scale. Outside of private equity, the firm is raising for infrastructure and real estate in Asia. Globally, there are also impact, real estate credit, special situations, and next-generation technology growth strategies, while fundraising for collateralized loan obligation (CLO) products, leveraged credit platforms, business development companies, and hedge funds happens on a continuous basis.

“For us, this growth opportunity is compounded by the fact that while we’ve been launching new investing businesses, we’ve also been making large investments in distribution. We relate to building out our distribution efforts. Remember, 10 years ago, we had about a dozen people on our fundraising team and 275 investors. We now have 90 people on the team and nearly 1,000 investors, but we still have a long way to go,” Nuttall said.

Total assets were $205.7 billion as of June, while management fees were $1.15 billion on a 12-month trailing basis. The asset split was $112 billion for private markets and $93.6 billion for public markets. In addition, there were balance sheet investments worth $11.8 billion. Most of these are long-term core investments that generate a lower return than PE but are more stable.

Within Asia, KKR’s most recent private equity activity has focused on exits. The firm agreed to sell Korean copper foils manufacturer KCF Technologies to an affiliate of SK Group for KRW1.2 trillion ($1 billion) and Japan’s Kokusai Electric to Applied Materials for $2.2 billion. They represent the first two exits from Fund III.

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• Topics
• Fundraising
• Buyout
• North America
• Infrastructure
• Asia
• KKR