Fundraising - JULY 8, 2015

KKR closes $3.1b global infrastructure fund

by Zoë Wolff and Andrea Waitrovich

KKR has announced the final closing of KKR Global Infrastructure Investors II, raising $3.1 billion in equity commitments.

The global fund focuses on identifying, pursuing, executing and managing infrastructure investments with an emphasis on OECD countries.

“A decrease in public funding and weakened economic conditions in many regions are driving tremendous global demand for private investments in infrastructure, and KKR’s differentiated strategy allows us to meet this need with value-added solutions,” said Marc Lipschultz, global head of KKR’s energy & infrastructure business, in a statement. “In a volatile world, our infrastructure strategy offers stability with both current income and capital appreciation for investors.”

The fund will follow KKR’s existing infrastructure investment strategy, which stems from the firm’s belief that there is — and will continue to be — a growing need to replace, upgrade and expand infrastructure across the globe. KKR will continue to make investments in the energy supply chain, water systems, roads, railways, airports and communications networks.

The fund, which closed at its hard cap, received investments from corporate and public pension funds, asset managers, sovereign wealth funds, insurance companies, and foundations. Some of those investors included the $632.5 million Merced County (Calif.) Employees Retirement Association and the $12.8 billion Maine Public Employees’ Retirement System.

With the closing of the fund, KKR has approximately $5.6 billion in infrastructure assets under management and has also deployed approximately $1.0 billion through infrastructure co-investments.

Recent infrastructure investments include an investment to support improvements in the water and wastewater systems in Bayonne, N.J., and Middletown, Pa.; Veresen Midstream Limited Partnership, a natural gas midstream platform with Veresen Inc. in Western Canada; European Locomotive Leasing, a provider of full-service electric locomotive leasing solutions to freight and passenger operators throughout continental Europe; and a partnership with Spain’s Acciona to support one of the largest operating international renewable energy portfolios in the world.

KKR Global Infrastructure Investors closed in 2012 with $1 billion of capital raised.

In the past three years, 44 infrastructure mega-funds ($1 billion or more of equity capital raised) have closed with more than $113.5 billion in committed equity, exceeding their collective $93.35 billion fundraising goal, according to IREI’s FundTracker database.

The largest fund to close during this period was Riverstone Global Energy & Power Fund V, managed by Riverstone Holdings, which held a $7.7 billion close in June 2013, exceeding its $7.5 billion equity fundraising target. Brookfield Infrastructure Fund II followed in second, raising $7 billion.

KKR Global Infrastructure Investors II follows closings by several other mega-funds earlier this year: British private equity firm Pantheon’s final close for its Pantheon Global Infrastructure Fund II, which raised more than $1 billion; EnCap Investments’ $6.5 billion final close for EnCap Energy Capital Fund X; Quantum Energy Partners' $4.45 billion final close for its Quantum Energy Partners VI and its affiliates; and I Squared Capital’s $3 billion final close for its ISQ Global Infrastructure Fund.



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