KKR is more than halfway to a US$20 billion money-raising goal for its North America buyout fund, a sign of momentum during a difficult environment for the asset class.
The New York-based asset manager has gathered around US$14 billion ahead of a first close of its North America private equity fund, according to sources with knowledge of the matter. The initial close could come as soon as this month, said the sources, who asked not to be identified discussing private details.
KKR began fundraising for the 14th iteration of its North America fund last June with the goal of raising a record US$20 billion. It amassed US$19 billion for the prior vintage.
A first close typically allows a fund to start investing while continuing to raise money and serves as a signal to the market about limited partner demand.
A spokesperson for KKR declined to comment.
KKR’s private equity business, led by Pete Stavros and Nate Taylor, has largely held up through a difficult couple of years for the industry. Higher interest rates have weighed on dealmaking, with firms reluctant to sell companies for less than they paid. That, in turn, is making it harder to raise new money from traditional US-based investors such as pension funds and is increasing focus on deep-pocketed Middle Eastern and Asian investors.
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The firm’s private equity business returned 14 per cent over the prior 12 months as at Dec 31, according to fourth-quarter earnings, making it the best-performing business alongside the infrastructure unit. Exits last year included an initial public offering for software company OneStream and the sale of GeoStabilization International. KKR expects profits from selling assets in 2025 to be higher than last year, chief financial officer Robert Lewin said on the fourth-quarter earnings call.
Leaning in
KKR stands out for leaning into private equity at a time when many of its peers, including Apollo Global Management, have lowered expectations for buyouts.
Taking a cue from the business model of Warren Buffett’s Berkshire Hathaway, KKR just over a year ago created a so-called strategic holdings unit to house investments in companies that it aims to keep for a decade or two. While the division is small now, it’s a big piece of KKR’s plans to more than quadruple earnings per share over the next 10 years.
KKR last week said it is boosting its stakes in USI Insurance Services, 1-800 Contacts and Heartland Dental by a total of about US$1.1 billion. That will lift operating earnings at its strategic holdings unit by US$50 million to at least US$350 million next year and by at least US$100 million annually to US$1.1 billion by 2030, the firm said. BLOOMBERG
