KKR closes USD2.0bn special situations fund
KKR has held the final closing of KKR Special Situations Fund (KSSF), a USD2bn global fund focused primarily on distressed and event-driven investments.
The fund, for which KKR began soliciting third party capital in 2012, received strong backing from a diverse group of new and existing global investors, including public and corporate pensions, sovereign wealth funds, insurance companies, foundations, private banking platforms, family offices and individual investors.
The fund closed at two times its original target of USD1bn.
Jamie Weinstein, co-head of special situations, says: “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.”
Launched in 2010, KKR’s Special Situations platform is part of KKR’s USD20.9bn credit business, which is expected to grow to approximately USD29bn with close of the announced acquisition of Avoca Capital. The global special situations strategy is managed by co-heads Nat Zilkha and Jamie Weinstein. The global team includes 15 dedicated investment professionals located in London, New York, San Francisco and Sydney and is supported by the broader KKR Asset Management credit investment team, comprised of over 40 dedicated credit investment professionals.
The special situations strategy invests across the capital structure in both privately negotiated transactions and in the secondary markets, seeking to earn strong risk adjusted returns from market dislocations, complex situations and distressed assets. KKR employs a partnership approach when working with companies and seeks unique opportunities to offer solutions to its various counterparties. The special situations strategy is dynamic and able to deploy capital in multiple ways in order to capture opportunities arising from market dislocation.
Zilkha says: “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.”
KSSF held its first close in December 2012 and began investing shortly thereafter. Prior to raising the fund, KKR’s special situations team primarily invested on behalf of large institutional clients through separate accounts. Today, with the new fund, KKR’s special situations platform has approximately USD4bn in assets under management.
Since the inception of the strategy in 2010 through Q3 2013, the strategy has generated a gross internal rate of return of 20 per cent, significantly outperforming the S&P 500, MSCI World, and ML High Yield Indices over the same period. Since inception, the strategy is ranked in the top quartile of similar vintage distressed and special situations funds.
Since the start of the new fund’s investment period, approximately 30 per cent of the fund’s capital commitments have been deployed in investment opportunities across the globe. KKR has been particularly active in Europe, having provided USD2bn of capital in the last two years to quality European companies looking for new capital partners. 2013 special situations investments include Hilding Anders International, a bed and mattress manufacturer based in Sweden; TPS Group, a food-related business in Indonesia; Winoa Group, a provider of abrasion and cutting technologies for the metal and stone industries based in France; the insulation division of Uralita in Spain; and Amedisys, a home healthcare company based in the US.
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