KKR Special Situations Fund Doubles Up Target
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KKR Special Situations Fund Doubles Up Target

kkr 6 nfKKR has held a final closing of KKR Special Situations Fund LP (KSSF or the Fund), with $2 billion of capital commitments, twice its original target of $1 billion. The new fund will focus on distressed and event-driven investments. KSSF held its first close in December 2012 and began investing shortly thereafter.

KKR began soliciting third party capital for the new fund in 2012 and received backing from a 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.

“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,” said Jamie Weinstein, Co-Head of Special Situations.

Launched in 2010, KKR’s Special Situations platform is part of KKR’s $20.9 billion credit business, which is expected to grow to $29 billion with the closing this quarter of the acquisition of Avoca Capital (announced in October 2013). The special situations strategy is managed by Co-heads Nat Zilkha and Jamie Weinstein and includes 15 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 investment professionals.

The special situations strategy invests across the capital structure in both privately negotiated transactions and in the secondary markets, seeking to earn risk adjusted returns from market dislocations, complex situations and distressed assets.

“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,” said Mr. Zilkha.

Prior to raising the new fund, KKR’s special situations team invested on behalf of large institutional clients through separate accounts. Today, with the new fund, KKR’s special situations platform has approximately $4 billion 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%, 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.

To date, approximately 30 percent of the Fund’s capital commitments have been deployed in investment opportunities. KKR has been particularly active in Europe, having provided $2 billion of capital in the last two years to 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 United States.

KKR makes private equity, fixed income and other investments in companies in North America, Europe, Asia and the Middle East. The firm has $90 billion in assets under management. KKR was founded in 1976 and in addition to its New York headquarters the firm has offices in Menlo Park, San Francisco, Houston, Washington DC, London, Paris, Hong Kong, Tokyo, Beijing, Mumbai, Dubai and Sydney (www.kkr.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-9-14

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