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KKR raises $19bn for its largest-ever fund

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Laxman Pai, Opalesque Asia:

The US buyout giant KKR & Co. wrapped up its largest-ever buyout fund – KKR North America Fund XIII – with $19 billion in investor commitments in a fundraising effort that broke an in-house record that has stood for more than 15 years.

A press release from the global investment firm that offers alternative asset management as well as capital markets and insurance solutions described the fund as the largest in its 46-year history. Its predecessor fund, KKR North America Fund XII, raised $13.9 billion and closed in 2017.

North America Fund XIII, dubbed NAX3, will be investing $2 billion of capital in the Fund alongside investors through the firm’s balance sheet, affiliates, and employee commitments.

NAX3 received strong support from a diverse group of both new and existing investors globally, including public and private pension plans, sovereign wealth funds, insurance companies, endowments and foundations, private wealth platforms, family offices, and high-net-worth individual investors, and other institutional investors.

Investors in the fund include California Public Employees’ Retirement System, Sacramento; Washington State Investment Board, Olympia; Michigan Retirement Systems, East Lansing; Oregon Public Employees Retirement System, Tigard; Illinois Municipal Retirement Fund, Oak Brook; Maine Public Employees Retirement System, Augusta; Louisiana State Employees’ Retirement System, Baton Rouge; and Louisiana State Police Retirement System, Baton Rouge.

“We are thrilled to have had such strong receptivity to our fundraising effort, and we are extremely proud of the results we’ve been able to deliver for our investors. We are excited about the early momentum for NAX3 and remain laser-focused on delivering outstanding results,” said Pete Stavros and Nate Taylor, Co-Heads of the Americas Private Equity platform at KKR.

According to the press release, over the past decade and across NAX3’s two predecessor funds, KKR North America Fund XI and KKR Americas XII Fund, KKR has delivered an average gross IRR of 30.1% (25.1% net) and a gross multiple on invested capital of 2.6x (2.2x net). In comparison to the S&P 500, this has resulted in net outperformance of more than 850bps, against the backdrop of near-unprecedented performance of the index over that decade.

KKR Americas XII Fund, which began investing in 2017, is now fully deployed. It has generated a gross IRR of 50.1% (41.9% net), with a gross multiple of 2.6x (net 2.2x), as of December 31, 2021. With the closing of NAX3, KKR’s Americas Private Equity platform has more than $90 billion in assets under management across flagship, growth, and core investment vehicles.

The Fund intends to implement KKR’s broad-based employee ownership program at majority-owned companies in which it invests, said the release.

Since 2011, KKR has focused on employee ownership and engagement as a key driver in building stronger companies and driving greater financial inclusion. The firm is committed to deploying the model in all control investments across its entire Americas Private Equity platform. To date, KKR has awarded billions of total equity value to over 45,000 non-senior employees across over 25 companies.