KKR Next Fund Not Expected To Top $18B

Kohlberg Kravis Roberts & Co., New York, plans to kick-off marketing for its next mega-fund sometime in 2011 but don’t expect the pool to reach $18 billion, said Alex Navab, co-head of the firm’s North American private equity practice.

Navab, who was speaking earlier this month at the Buyouts Conference in Dallas, said the firm is seeing “enthusiastic support” for KKR’s planned fundraising.

Navab, in an on-stage Q&A, wouldn’t give a size for KKR’s expected pool but said the firm will raise a large fund. “I don’t think $18 billion will be realistic in this environment,” he said. KKR’s last North American fund raised $17.6 billion in 2006 and is about 70% percent invested.

Also this month, Tony James, COO of KKR rival The Blackstone Group, said that his firm will close its latest mega-fund near $15 billion, up from the previously disclosed $13.5 billion.

Navab was also asked about Energy Future Holdings, the former TXU, which was acquired by KKR and TPG for $45 billion in 2007. The company recently took a third quarter $4.1 billion charge, which was its second multi-billion write-down. In February 2009, Dallas-based Energy Future Holdings announced an $8.9 billion write-down.

Navab said he’s taking a “long-term view” of the company and wishes natural gas prices were trading higher. The company has no covenant issues and “is a buyout work in progress,” he said.