KKR eyes $3bn for Special Situations fund II

The global distressed investor is seeking between $2.5 billion and $3.5 billion.

Alternative credit manager KKR is targeting $2.5 billion to $3 billion for its second special situations fund, a source with knowledge of the fund said.

The global Special Situations Fund II launched in December 2014 and retirement fund Maine Public Employees Retirement System is allocating $60 million to the strategy, as previously reported by PDI.

The successor fund is seeking to raise up to $1 billion more than it did for its first, which closed on $2 billion in January 2014, twice its original target of $1 billion. It’s understood the firm started marketing six months ago.

KKR declined to comment.

Limited partners to the first fund include Teacher Retirement System of Texas and MainePERS. The global special situations strategy is managed by Nat Zilkha, who moved back to the firm's New York headquarters from London last year, and Jamie Weinstein, who is based in San Francisco but also oversees the strategy in Asia. 

Investment allocation from the strategy will continue to have a strong focus on Europe, it’s understood. The London-based European special situations business is led by Mubashir Mukadam. Mark Brown, who joined in 2013 from GSO Capital, is also a director on the team.

A rise in distressed opportunities in Asia, as a result of the over-leveraged Chinese economy, might mean there is a slight increase in allocation to the region compared to the first fund, it’s understood. The IRR on Fund I was 17 percent, as of the third quarter 2014.