Kayne Anderson seeks $4bn for multiple debt strategies

The figures cut across four separate vehicles. 

Los Angeles-based Kayne Anderson Capital Advisors is amassing a heap of capital across a handful of strategies that in total target up to $3.91 billion, according to documents from the San Bernardino County Employees’ Retirement Association.

The asset management firm is currently in the market for $1.25 billion for Kayne Senior Credit Fund III; $1.5 billion for Kayne Real Estate Debt Fund III; $150 million to $160 million to invest in a Kayne Anderson collateralised loan obligation warehouse; and $750 million to $1 billion for Kayne Solutions Fund, an investor presentation shows.

The firm could not be reached for comment.

SBCERA is set to approve a $150 million allocation to Kayne Anderson, a figure that would be invested across the investment firm’s various strategies, including energy private equity, credit, real estate and growth equity. The pension fund board will consider the measure at its Thursday meeting.

Senior Credit Fund III, which will target niche-dominant mid-market companies with strong cash flows, according to the documents, is aiming for a 10-12 percent net return with an 8 percent yield. The vehicle will last four years from the end of the investment period, which the presentation did not detail, with the possibility of two one-year extensions.

Through the fund, Kayne Anderson will make investments of $15 million-$50 million in companies with $50 million to more than $500 million in revenues and EBITDA of $10 million-$50 million.

Real Estate Debt Fund III will target Freddie Mac B-Pieces, a first-loss bond part of Freddie Mac’s structured credit risk notes that consist of unsecured and subordinated debt in multifamily mortgages. The vehicle will also invest in originated subordinated debt in senior housing, student housing and multi-family properties.

The firm’s latest real estate credit vehicle is targeting a 10 percent net return with a 10 percent yield and will last seven years beyond the investment period, which the SBCERA documents did not detail. In 2015, Kayne Anderson’s real estate debt team structured and secured more than $2 billion for the firm’s real estate equity funds.

The firm’s CLO fund, Kayne Credit Partners, is looking to generate a 12-16 percent net return with a 15 percent yield. The vehicle would have a three-year investment period and a 10-year life from final close, subject to two one-year extensions. The vehicle will also have a “significant capital commitment” of around 20 percent from the firm and its partners.

The Solutions Fund will invest in credit opportunities that do not fit within existing vehicles’ mandate, which will consist of about 80 percent of the fund, and alongside investments from its other funds that require additional capital. The Solutions Fund will invest in senior and mezzanine debt, real estate debt, energy credit and master limited partnerships. 

The vehicle, which will be managed by chief executive officer Michael Levitt and chief operating officer Paul Blank, carries a three-year commitment and a five-year harvest period with two one-year extensions. The fund’s limited partners may also be able to invest alongside Kayne Anderson.

SBCERA’s investment committee gave preliminary approval to the $150 million master custody account. A potential allocation of the capital outlined in the pension fund documents includes $30 million to Senior Credit Fund III, Real Estate Debt Fund III and the CLO fund along with an additional $15 million to the Solutions Fund. The remaining $105 million would be allocated to energy private equity ($30 million), real estate and growth equity (each receiving $15 million) and uncommitted portions reserved for future Kayne Anderson funds ($45 million).

Founded in 1984, Kayne manages $25 billion across its strategies for institutional investors, family offices, high-net-worth and retail clients, according to its website.