Private equity company KKR & Co. announced the final closure of its first fund, which will target infrastructure investments in Asia Pacific and will have $3.9 billion at its disposal.
KKR (KKR) said that the fund closed at its hard cap and is the largest pan-regional infrastructure fund to have been raised for Asia Pacific. The private equity company invested about $300 million in the fund alongside external investors through its balance sheet and employee commitments.
KKR disclosed that the fund was “significantly” oversubscribed and received strong backing from a diverse group of global infrastructure investors, including public and corporate pensions, sovereign wealth funds, insurance companies, endowments, private banking platforms, family offices and high net worth individual investors.
“We believe that Asia Pacific contains some of the most favorable macroeconomic dynamics in the world, and that the region is expected to account for more than half of the world’s economic growth in the coming years,” said Ming Lu, Head of KKR Asia Pacific. “However, the demand to develop or upgrade critical infrastructure assets outpaces the available public funding in many markets. Private capital is playing an increasingly important role to fill the gap in the region, and through our new fund, KKR is committed to investing in essential infrastructure solutions over a long-term horizon.”
Specifically, the fund will focus on investments in critical infrastructure with low volatility and strong downside protection where KKR believes it can achieve attractive risk-adjusted returns. The fund has a broad investment mandate across both emerging and developed Asia Pacific, across sectors, including waste, renewables, power and utilities, telecoms and transportation infrastructure.
KKR first established its global infrastructure team and strategy in 2008 and has since committed more than $24 billion across about 40 infrastructure investments. In Asia, the private equity firm has committed $1.8 billion across six investments in the infrastructure sector.
Shares in KKR have jumped 35% over the past year and the global investment company scores a Moderate Buy Street consensus. That’s alongside an average analyst price target of $44.31, indicating 9.4% additional upside potential lies ahead.
Oppenheimer analyst Chris Kotowski recently reiterated a Buy rating on the stock with a price target of $42. The analyst said that “capital markets fees have proven to be a sizable contribution to total fee revenues on an annual basis with great upside potential to already strong FRE [fee-related earnings] and performance revenues.”
He also believes that the company will generate “performance fees for 2021E and beyond.” (See KKR stock analysis on TipRanks).
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