KKR plans fundraising in ‘next few quarters’

The firm’s 2006 global buyout fund, which raised nearly $18bn, is nearing the 75% invested threshold.

Kohlberg Kravis Roberts is likely to start raising its next global private equity fund “in the next few quarters”, Scott Nuttall, head of KKR’s global capital and asset management group, said during the firm’s second quarter earnings call Tuesday.

“We haven’t quite determined when to launch the fundraising process; [it will be] some time in the next few quarters.” Nuttall said during the call. “As a general matter, we’re finding the fundraising environment continues to improve. [Institutional investors] are looking for ways to generate returns. The overall tone is better.”

The firm’s most recent global private equity fund, the KKR 2006 Fund, closed on $17.6 billion in 2006. It is almost 75 percent invested, with about $4.6 billion of dry powder remaining, according to KKR’s earnings report.

KKR, which currently counts around 300 investors across its various funds, is working to expand its LP base. It is particularly targeting high net worth individuals, Nuttall said.

“We’re out building a new set of relationships all over the world,” he said, adding the firm is seeing interest from sovereign wealth funds, insurance companies, public pensions in the US and Europe and endowments and foundations.

We haven't quite determined when to launch the fundraising process; [it will be] some time over the next few quarters.

Scott Nuttall

As of the second quarter, KKR has raised $257 million for its Natural Resources effort, which started in March, and $429 million for its mezzanine group, which launched last year, according to the earnings report. The firm has not disclosed the ultimate targets for the funds.

The firm experienced some gains in the second quarter, which started out well but ended with uncertainty in the financial markets, Nuttall said. KKR reported its assets under management increased to $54.4 billion as of 30 June compared to $46.9 billion a year ago.

The value of KKR’s private equity portfolio was up 3.5 percent in the second quarter. Also, the firm distributed $713 million to investors in Q2, compared to $589 million in the first quarter.

“We’re pleased with the progress of our portfolio,” Nuttall said. “Performance has been quite strong through the first quarter and remained strong through April.”

The firm listed on the New York Stock Exchange on 15 July, with its shares trading at $10.50. On Tuesday afternoon, the shares were trading around $9.87.

Along with the listing, KKR had filed a $500 million stock offering, but the firm this week chose to withdraw the offering because of “market volatility”, Nuttall said.