KKR charts first close for European IV fund; touts real estate IRR

Citing greater confidence from limited partners and an upswell in private equity returns and allocations, KKR said it’s tapping its own balance sheet for deals in the region since its KKR European Fund III’s committed capital of about $6 billion is now fully invested.

Marketing of KKR European Fund IV kicked off in February and March, with a first close expected late this year or early next year, said Scott Nuttall, member and head of global capital and asset management group. Overall, the investing environment in Europe has been “swinging from fear to greed” in the last 12 months as growth in the region picked up strength, he said. 

On the acquisition side, KKR used its balance sheet to invest in OEG Offshore Group, an Aberdeen, UK, manufacturer of carrying units to move equipment and supplies to oil and gas rigs, in a deal announced July 9. This and any other deals from the firm’s balance sheet will be rolled into European Fund IV.

Nuttall cited KKR’s sale of European portfolio firm Wild Flavors GmbH for an enterprise value of $3.1 billion to Archer Daniels Midland in a deal announced July 7 as an example of the firm’s recent moves in the region.

Separately, KKR’s $1.5 billion KKR Real Estate Partners fund has turned in an IRR of 60 percent, boosted by a 5x gain on its “big win” exit of Sunrise Senior Living LLC earlier this year, KKR said. It’s still early days for the fund, which held its final close in 2013. “It’s off to a great start,” Nuttall said.

Nuttall’s comments came on July 24 during KKR’s quarterly Wall Street investor update, a call that often reveals the firm’s latest fundraising efforts and comments on the deal-making environment.