KKR’s $20 Billion Goal Tests Investor Appetite for Buyout Funds

Bloomberg10-31

(Bloomberg) -- Private equity pioneer KKR & Co. is testing whether investors still crave the asset class after more than two years of sluggish dealmaking squeezed returns across the industry. The firm...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nKKR’s $20 Billion Goal Tests Investor Appetite for Buyout Funds\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-31 19:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/kkr-20-billion-goal-tests-113000412.html><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>(Bloomberg) -- Private equity pioneer KKR & Co. is testing whether investors still crave the asset class after more than two years of sluggish dealmaking squeezed returns across the industry.\nThe firm...</p>\n\n<a href=\"https://finance.yahoo.com/news/kkr-20-billion-goal-tests-113000412.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B64PRP62.GBP","symbol_name":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC","start_time":0,"source_url":"https://finance.yahoo.com/news/kkr-20-billion-goal-tests-113000412.html","article_id":"2479606083","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/0Pz1s.xTMaXWPq1m8nj7TA--~B/aD0xMzM0O3c9MjAwMDthcHBpZD15dGFjaHlvbg--/https://media.zenfs.com/en/bloomberg_markets_842/20c6495ca008b89c513daef2cbe1491f"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2479606083","pubTimestamp":1730374200,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":" -- Private equity pioneer KKR & Co. is testing whether investors still crave the asset class after more than two years of sluggish dealmaking squeezed returns across the industry.The firm recently began gathering cash for its latest North America buyout fund, aiming to raise $20 billion and offering incentives to investors who sign up early and with a sizable check, according to people with knowledge of the matter.KKR will come up against fierce competition for cash, with some pensions and endowments slashing private equity allocations in favor of private credit, infrastructure and other hot areas of alternative markets. Payouts to investors in private equity funds, known as limited partners, have generally plunged across the industry in the past couple of years as higher interest rates curbed deal-making due to higher debt costs.The firm’s executives have emphasized how much money KKR has raised outside of its flagship funds, including in its growing s","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC","LU0106831901.USD":"贝莱德世界金融基金A2","BK4135":"资产管理与托管银行","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","LU1935043023.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME \"AA\" (USD) INC A","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","BK4585":"ETF&股票定投概念","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","LU1935042488.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME  \"AA\" (USD) INC","KKR":"KKR & Co L.P.","LU1791807156.HKD":"BGF WORLD FINANCIALS \"A2\" (HKDHDG) ACC","LU1935043536.SGD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME \"AA\" (SGDHDG) INC A","BK4588":"碎股","LU1935042215.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME  \"AA\" (USD) INC A","LU1935042991.SGD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME  \"AA\" (SGDHDG) INC"},"translate_title":"KKR 200亿美元目标考验投资者对收购基金的兴趣","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"KKR":1},"content_text":"(Bloomberg) -- Private equity pioneer KKR & Co. is testing whether investors still crave the asset class after more than two years of sluggish dealmaking squeezed returns across the industry.\nThe firm recently began gathering cash for its latest North America buyout fund, aiming to raise $20 billion and offering incentives to investors who sign up early and with a sizable check, according to people with knowledge of the matter. \nAfter mostly staying on the sidelines of private equity fundraising for more than two years, KKR is wading into an environment that has disappointed its biggest peers. Apollo Global Management Inc., Blackstone Inc. and Carlyle Group Inc. have each fallen short of initial expectations for their flagship funds after the Federal Reserve started raising interest rates in March 2022.\n“When people ask me what are you watching in the second half of the year — this is one of the things,” Patrick Davitt, an analyst at Autonomous Research, said in an interview. “How easy is it going to be for KKR to get to that first close?”\nKKR will come up against fierce competition for cash, with some pensions and endowments slashing private equity allocations in favor of private credit, infrastructure and other hot areas of alternative markets. Payouts to investors in private equity funds, known as limited partners, have generally plunged across the industry in the past couple of years as higher interest rates curbed deal-making due to higher debt costs.\nUS private equity firms have been going to Asia and the Middle East to drum up fresh sources of cash to offset the harder environment at home.\nSeveral large US pensions that aren’t invested with KKR told Bloomberg they don’t plan to add so-called mega-buyout funds to their portfolios, underscoring the challenges of enlisting new limited partners in the US. Although KKR’s private equity returns have been among the best in the industry, these institutional investors are pursuing smaller managers and more-niche strategies, they said.\nKKR still counts large US pensions, including New York State Common Retirement Fund and Washington State Investment Board, as longtime investors that allocate to multiple KKR funds across strategies.\nKKR’s 14th flagship North America fund — which started fundraising in June — plays a key role in what the firm calls a “fundraising super-cycle.” The firm aims to top the $19 billion raised for the last North America fund. It recently raised $4.6 billion for its first middle-market private equity fund, called Ascendant.\nThere are signs the deal market is thawing as private equity firms become increasingly eager to generate returns and the Fed embarks on its cutting cycle, but it could take time for buyouts to come roaring back. The speed and ease at which KKR can raise its latest fund is one indicator of how the asset class will fare going forward.\nThe firm’s executives have emphasized how much money KKR has raised outside of its flagship funds, including in its growing suite of products for individual investors. The firm had raised $85 billion year-to-date as of Sept. 30, executives said on its third-quarter earnings call last week.\nA spokesperson for KKR declined to comment. \nWell-Timed Bets\nFounded in 1976, KKR runs one of the oldest private equity businesses, if not the oldest. \nThe firm — memorialized in the classic private equity tome, Barbarians at the Gate — has since grown beyond its roots into one of the world’s biggest alternative-asset managers, with strategies including credit, infrastructure, real estate and insurance. It had $624 billion of assets as of Sept. 30, making it the third-biggest US alternatives manager by assets, and it aspires to reach $1 trillion in five years.\nKKR shares have soared roughly 150% over the past 12 months, marking the fourth-best performance on the S&P 500 and handily beating its biggest competitors. \nThe firm’s private equity business has largely held up in recent years, with the notable exception of Envision Healthcare, a hospital staffing company that filed for bankruptcy in 2023. Its 11th and 12th private equity funds, which finished investing in 2017 and 2021, have together generated a 2.8 times multiple on invested capital, according to marketing documents seen by Bloomberg, meaning that investors got $2.80 for every $1 invested.\nThe 13th fund, which launched in 2021 and is still investing, generated a 1.1 multiple as of March 31, according to data from the California Public Employees’ Retirement System.\n“Everyone really, other than KKR, has been kind of mixed on private equity,” including the ability to sell assets, Davitt said, referring to its larger peers. “Their private equity business is kind of bucking the trend.”\nKKR made well-timed bets in technology and growth companies that then went public, including financial software company OneStream, mobile tech firm AppLovin, and chip tool maker Kokusai Electric, he said. The firm also reached a deal last month to sell GeoStabilization International. \nKKR is offering investors sweeteners to get into the latest private equity vehicle, consistent with broader industry practice and with what it has extended to new investors in the past to pique their interest. The fund will charge a 1.5% management fee that it will reduce to 1.4% for investors who allocate at least $300 million and 1.25% for investors who commit at least $500 million, according to people with knowledge of the matter.\nAdditional commitments above $500 million will be charged a 0.375% management fee. Investors who come into the fund early get a further reduction of 10 to 15 basis points on those levels.\nKKR offers two unique propositions that set its private equity franchise apart from its biggest peers — ownership stakes to some employees at US portfolio companies, and its so-called strategic holdings unit for long-term bets.\nTaking a cue from Berkshire Hathaway Inc., KKR recently created strategic holdings to manage long-term private equity bets that generate dividends. KKR pointed to the unit as one of its three pillars of long-term growth, alongside the broader asset management business and insurance.\n©2024 Bloomberg L.P.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2479606083"}