KKR Eyes $20B New North America Fund In Tough Market: Report

Zinger Key Points
  • KKR aims to raise $20 billion for new fund.
  • Fund targets high-teens IRR and annual capital deployment.

KKR & Co Inc KKR is reportedly targeting $20 billion from investors for its latest North America private equity fund, North America Fund XIV.

This comes three years after the firm launched a predecessor fund of similar size. With $578 billion in assets under management as of March, KKR is navigating a challenging fundraising environment, where high interest rates have made refinancing and asset sales more difficult.

The new fund, which began marketing to investors this month, aims for a net internal rate of return (IRR) in the high teens and plans to deploy 20% to 25% of its capital annually, reported Reuters.

KKR’s previous North American fund, launched in 2017, achieved a net IRR of 20.5% as of March.

The firm’s fundraising efforts will test investor confidence in KKR’s recent performance in regional buyouts. For comparison, Carlyle Group Inc’s CG 2018 fund reported a net IRR of 8%, and Bain Capital’s 2017 fund reported a net IRR of 17.1%, the report highlighted.

Also Read: KKR, GIP Team Up For $25B Indo-Pacific Infrastructure Investment

Despite the challenges, KKR remains optimistic. CFO Robert Lewin noted at a recent summit that fundraising conditions have improved over the past year.

KKR has raised approximately $180 billion from early 2022 to the first quarter of 2024. Additionally, KKR has committed to offering equity to rank-and-file employees of its portfolio companies in North America, a program initiated by KKR’s global private equity co-head Pete Stavros.

This initiative has reportedly led to higher revenue, improved productivity, and lower turnover.

KKR’s broad-based employee ownership program has generated significant additional income for employees at its portfolio companies.

Co-founder and co-executive chair Henry Kravis highlighted the program’s success at CHI, a former KKR-owned garage door business, where employees saw an average increase of $175,000 in income.

KKR stock has gained more than 105% in the last 12 months. Investors can gain exposure to the stock via Northern Lights Fund Trust IV FMC Excelsior Focus Equity ETF FMCX and EA Series Trust WHITEWOLF Publicly Listed Private Equity ETF LBO.

Price Action: KKR shares are trading higher by 0.23% at $109.16 at last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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