KKR Raises a Large Americas-Focused Private Equity Fund


March 7, 2017

Private equity firm KKR has raised a $13.9 billion fund. The fund will focus on private equity deals in the US, Canada and Mexico and it is the largest fund to focus on the region. The firm announced the KKR Americas XII Fund on Monday.


The fund’s objectives


KKR is set to invest around $1.4 billion from the firm’s balance sheet and employee commitments. The fund will also feature investments from both new and existing investors, including insurance companies, public pensions and sovereign wealth funds.


The fund will aim to invest in traditional management buyouts and growth equity deals. Furthermore, KKR might partner with public companies in the so-called public toehold investments. These are likely to focus on seven core industries, which include energy, healthcare, media & communications, and technology.


So far, the private equity company has invested $48.5 billion in the Americas through its 11 North America focused private equity funds. Alexander Navab, head of Americas private equity at KKR, said in the official announcement, “In today’s increasingly complex world, we are pleased that they share our enthusiasm for the opportunities that lie ahead in the Americas, in particular the U.S. where we anticipate significant long-term investment opportunities.”


Furthermore, Navab told Bloomberg the future focus would probably be in creating synergies between different investments. “Over the course of the next year or two you’ll see a number of our portfolio companies acquire small and large entities in their industries,” Navab told in the telephone interview.


The private equity firm’s most recent investments have been overseas. It recently acquired a 10% stake in the German research firm, GfK.


The biggest Americas-focused fund


KKR’s fund is the largest fund focused on investing in the region, according to Bloomberg. Nonetheless, other private equity firms have raised bigger global buyout funds KKR also raised $17.6 billion with its 2006 fund that made investments in North America, but also Europe and Asia.


The previous fund by the private equity firm managed to raise $9 billion. It also generated an 18% annualised return after fees. Last December it was valued 1.4 times cost.


Bain & Co.’s global private equity report shows that there has been a slight decrease in the amount of capital raised by private equity firms. Yet, since 2013, the industry has managed to raise over $500 billion every year. Big buyout companies have been able to raise plenty of cash for their new investment funds. Silver Lake is heading towards $12.5 billion raised for its fifth main fund and Apollo Global Management has started collection commitments.


Furthermore, Advent International managed to raise $13 billion within six months in 2016. The buyout fund managed to surpass its previous fund’s total investment, signalling the strength in the sector.


Interest in the Americas is also not a surprise considering the hopeful mood among investors regarding the financial sector in the US. The executives have said they are looking forward to the possibility of positive changes in taxation and the regulatory system under the current Trump Administration.

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