KKR plans new Euro fund

Following a spate of big-ticket buyouts overseas, Kohlberg Kravis Roberts & Co. is beginning to talk to LPs about raising its next European fund, likely to be much larger than its previous $6 billion vehicle.

A source at one major LP said that it would be meeting later this month with KKR to discuss re-upping. A spokesman for New York-based KKR declined comment.

The firm closed its previous European vehicle in October 2005, crushing an original $2 billion target. The firm raised its first European fund in 1999, with $3 billion in commitments. The LP source did not know the new fund’s target.

LPs in the most recent fund include the Canadian Pension Plan Investment Board, California Public Employees’ Retirement System, HarbourVest Partners, State of Michigan, Oregon State Treasury, South Dakota Investment Council and Washington State Investment Board. Oregon and Washington reportedly each invested $500 million in the second fund.

KKR’s most recent play in Europe is the planned $21 billion LBO of British drug store chain Alliance Boots. But the Boots deal is far from KKR’s only sizeable European transaction in the last two years. It clubbed with other buyout firms to buy Danish telecommunications company TDC A/S for $10.6 billion in late November 2005, then bought Dutch publisher VNU NV for $11.3 billion in January 2006, completing the two deals within six weeks.

KKR debuted in Europe 11 years ago and has since established itself as one of the top sponsors on the continent. The firm is particularly strong in Germany, where portfolio companies include auto parts retailer A.T.U Handels GmbH & Co KG, waste manager Duales System Deutschland GmbH and TV broadcaster ProSiebeSat.1 Media AG. —Mark Cecil