With Strong 2Q In Rearview, KKR Sets Sights On $13B Fund by Kevin Dowd, PitchBook

The major focus of KKR’s 2Q earnings call was the firm’s better-than-expected performance, but another nugget of major interest emerged, too: KKR is reportedly collecting capital for its Americas Fund XII and expects to close the vehicle during 2H on $13 billion, comprising $12 billion in outside commitments and an additional $1 billion from the firm itself. With a successful close on that target, KKR would tie Advent International’s Fund VIII for the largest buyout vehicle of 2016, according to the PitchBook Platform.

Such a fund would also be the second largest in KKR’s history, trailing only its monstrous 2006 fund that closed on more than $17 billion in the months leading up to the financial crisis. While investors like Goldman Sachs have set more modest ambitions for successors to the $10 billion-plus buyout funds raised before the crisis, KKR isn’t shying away from collecting massive pools of cash.

To give an idea of what sort of returns we might expect from KKR’s latest fund, here’s a breakdown of how the firm’s four most-recent North American buyout vehicles have fared as of 1Q this year:

Metrics for KKR’s latest North American buyout funds

KKR

Setting aside a post-crisis dip in 2008, KKR has steadily increased its private equity activity in North America since 2001. After completing just 12 deals in 2003 and 23 in 2007, the firm executed 47 transactions in the U.S. and Canada during 2013, according to the Platform. A plurality of that activity (23.6%) has taken place in the B2B industry, but an increased focus on IT (21.8%) is what makes KKR stand out from the rest of the PE pack.

So far this year, KKR has been busy with headline-grabbing deals. This month alone, the firm joined Silver Lake, Michael Dell and WME | IMG in a $4 billion buyout of fight organizer UFC and acquired Epicor Software from Apax Partners for $3.3 billion. Other notable targets in 2016 include the defense electronics division of Airbus (for €1.1 billion), solar power developer X-ELIO Energy (at a $1 billion value) and Korean supermarket chain Kim’s Club (at a reported value of $600 million).