- Has taken minority stakes in Magic Leap, Lemon Drop, Ping Identity
- Finding more “interesting” deals that aren’t buyouts
- Will invest off balance sheet for now
Scott Nuttall, member and head of global capital and asset management group, mentioned the possibility of a growth fund today in a conference call about Q3 results.
KKR this week joined a $542 million financing round led by Google Inc for Magic Leap, a technology firm company on 3-D imaging for entertainment and other uses. Earlier in the month, it invested an undisclosed sum in Lemonade Restaurants, a Los Angeles-based operator of 14 fast-casual eateries founded in 2008. In the prior month, KKR led a $35 million investment in Ping Identity, a Denver-based provider of next-generation identity security solutions.
“Think of these as opportunities sourced by our investment teams that historically we passed on and now we have a way to monetize,” Nuttall said. “Historically, we have passed on those because it didn’t fit into a private equity mandate or any of the other strategies that we manage, but we’ve found many of them to be quite interesting.”
He noted that KKR’s move into real estate started as balance sheet investments that were later dropped into a formal private equity fund.
“We may do that with growth equity down the line [or] we may not,” Nuttall said.
Elsewhere in its private equity business, KKR has used all the capacity it had in its real estate fund for European investments, so it’s going to be launching a real estate strategy, he said. He did not provide any additional details.
On the fundraising front, Nuttall said KKR wrapped up its KKR Asian Fund II with $6 billion. About “seven or eight” Fund II strategies are in the market now or will be launching shortly around infrastructure, special situations, mezzanine and private credit. KKR is also readying a second real estate fund, he said. KKR Real Estate Partners Americas raised $1.5 billion in 2013, according to Thomson Reuters.
Nuttall said about 70 percent of KKR’s new deal activity in the third quarter took place outside the United States, where the firm has been more cautious. A drop in oil prices in recent weeks may create opportunities for investments in the energy sector, he said.
“Overall, where there’s a little bit of fear, we get excited and find opportunity,” he said. “And when valuations are a bit elevated, we have a big portfolio and the opportunity to access the markets. And so we actually are pleased with the current environment.”