KKR raises $2bn for distressed vehicle

The US group is eyeing Europe after its global special situations fund came in $1bn over target.

Kohlberg Kravis Roberts has raised $2 billion for a special situations fund, closing the fund at double its original target, according to a statement.

The firm had planned to raise just $1 billion, but eventually raised twice that from both new and existing global investors. Without disclosing specific LPs, the statement said the fund attracted public and corporate pensions, sovereign wealth funds, insurance companies and family offices, among others.Limited partners include the Teacher Retirement System of Texas and the Maine Public Employees Retirement System, according to Private Equity International’s Data and Analytics division. 

The fund was launched in 2012 and held a first close in December the same year. 

“We are pleased we were able to attract such a diverse mix of new and existing KKR investors to the fund and the strategy. We are very optimistic about the global opportunity set and continue to find attractive ways to put capital to work,” KKR co-head of special situations, Jamie Weinstein, said.

The fund is targeting “distressed and event-driven investments” globally, hoping to gain strong risk-adjusted returns from market dislocations, complex situations and distressed assets, the statement said.

Since the first close, the fund has deployed about 30 percent of its capital commitments globally, with the firm particularly active in Europe. Prior to the fund, KKR’s special situations unit invested via separate accounts and has invested about $2 billion in Europe over the past two years.

The vehicle is part of KKR’s special situations platform, which was first launched in 2010 and falls under the firm’s $20.9 billion credit business.

Distressed investing has picked up worldwide as businesses continue to struggle in difficult macroeconomic climates.

“Across the globe, we have identified a number of opportunities to invest in good companies in need of a partner with long-term capital to help them grow, or to restructure a challenging situation. In each case, our goal is to be a constructive partner of choice while also delivering strong returns for our investors,” Nat Zilkha, co-head of KKR's special situations unit and the firm's head of credit, commented.

Europe, in particular, is beginning to draw significant interest from investors. Last year, KKR agreed to acquire European credit specialist Avoca Capital. The transaction, expected to close during the first quarter, would represent a remarkable expansion of KKR’s European credit practice, which would grow by approximately €8 billion in assets under management upon close.

Other firms have bulked up their presence on the continent as well. Fortress Investments recently held a first close on $888 million for its debut Italian non-performing loan fund.

The KKR Special Situations made a number investments in Europe last year, providing capital to Swedish bed and mattress manufacturer Hilding Anders International, French abrasion and cutting technologies company Winoa Group and the insulation division of the Spanish company Uralita. The special situations team also invested in US home healthcare company Amedisys and TPS Group, an Indonesian food-related business.