KKR infrastructure fund closes on $1bn

Kohlberg Kravis Roberts & Company (KKR) has closed its maiden infrastructure fund on over $1 billion, concluding a four-year-long capital raise and helping to bring its real asset platform to $4 billion.

KKR, a 36-year-old private equity firm headquartered in New York and a manager to $62 billion, disclosed Tuesday that its infrastructure business, including its $1 billion infrastructure fund, totalled $2.4 billion in committed capital. 

That amount includes $1.3 billion in infrastructure-related separate accounts, including a $1.1 billion account on behalf of South Korea’s $320 billion National Pension Service, which opened a London office just last week. 

The close of the fund, named KKR Global Infrastructure Investors, coincided with a separate close of its natural resources fund, which reached $1.25 billion and comprised the greater part of a $1.6 billion natural resources portfolio, according to KKR.

Both infrastructure and natural resources help KKR enlarge its non-private equity business but “benefit from our global footprint,” said Marc Lipschultz, KKR global head of energy and infrastructure, in a press announcement.

KKR Global Infrastructure Investors has a global energy bias, emphasising midstream and renewable energy, as well as water, power and gas, with limited exposure to social infrastructure and transportation.

In 2011, the KKR vehicle joined with Partners Group to purchase Sorginia, a wind power operator, for $294 million, while also partnering with Munich Re to obtain 49 percent of Grupo T-Solar, the largest solar photovoltaic (PV) power generator in Europe.

The launch of the infrastructure fund in 2008 dovetailed with the advent of increased private equity participation in infrastructure. In addition to KKR,The Blackstone Group and Washington, D.C.-headquartered Carlyle Group were also venturing into the asset class.

But its launch, in the thick of the global financial crisis, hampered fundraising. KKR did not announce a major investment in the vehicle until late 2010, when the firm revealed its first close in November, then announced its second close, on $500 million, that December.

That year, KKR also revealed its natural resources fund had completed its first deal – a $40 million gas well in Texas. KKR in its announcement credited growing market appetite for unconventional oil and gas for helping to capitalise the natural resources vehicle.