KKR raises more than $1.5bn for its latest direct lending vehicle

The fund closed right at its target and plans to lend to US-based, upper mid-market companies.

KKR held a quiet final close on its latest direct lending fund during the last quarter of 2018.

The New York-based investment firm closed KKR Lending Partners III on 2 November with capital commitments of more than $1.5 billion – its stated target – according to a source familiar with the matter. Meeting documents from a Minnesota State Board of Investment meeting in May 2017, however, originally cited the fund’s target as $2 billion.

The firm declined to comment.

The fund will focus on “larger deals” within the upper mid-market, primarily to US-based companies, the source said. This person added that the fund will deploy loans worth approximately $200 million on average and plans to focus on deals where KKR is the sole or lead lender.

The fund garnered support from both new and repeat limited partners, including institutional investors, high-net-worth individuals and family offices.

The Minnesota State Board of Investment re-upped its investment, committing $200 million to Fund III after contributing $75 million to Lending Partners II. The South Carolina Retirement System invested $225 million into Fund III and $125 million into Fund II.

Fund II closed in 2015 with $1.34 billion in capital commitments and has posted a net internal rate of return of 9.9 percent. Fund I wrapped up fundraising at $460.2 million and has since posted a 5.2 percent net IRR.

KKR is a global asset management firm. Its credit branch has more than $62.8 billion in assets under management. The firm has more than $195 billion in assets under management.