KKR secures $16.8bn for latest flagship vehicle, continues fundraising

Private equity giant KKR, which recently announced a major leadership transition, shot past the initial target set for its 13th flagship buyout offering.

KKR North America Fund XIII brought in nearly $16.8 billion as of the end of September, the firm said in its third-quarter financial results. That puts the vehicle well ahead of a $14 billion target, reported earlier this year by Buyouts and other sources.

Fund XIII, which held a first close in Q2 2021, will remain on the fundraising trail, sources told Buyouts. The offering’s hard-cap is not known. KKR declined to provide a comment.

With $16.8 billion in the bank, the fund may be on track to become the largest ever raised in KKR’s 45-year history. The biggest, KKR Associates 2006 Fund, collected $17.6 billion. Fund XIII is already 21 percent larger than its predecessor, wrapped up in 2017 at $13.9 billion.

Fund XIII was part of vigorous fundraising by KKR in the third quarter and over the course of this year. The firm reported amassing $28 billion in fresh commitments during July-to-September, bringing the year-to-date total to $102 billion, more than double the haul in the whole of 2020.

This took place against a backdrop of record-breaking fundraising across the North American market. Almost $361 billion was gathered by 617 buyout, growth equity, venture capital and other PE funds in this year’s first three quarters, Buyouts reported, an all-time high for the period.

If PE fundraising in the fourth quarter sustains this momentum, the final total could approach or improve on the record $497 billion secured in 2019. A key factor here could be especially large and high-profile funds that are still in the market, such as KKR’s latest flagship vehicle.

KKR, which today oversees $459 billion of assets, last month announced completing a succession that saw storied co-founders Henry Kravis and George Roberts step down as co-CEOs. Top leadership was handed over to Joe Bae and Scott Nuttall, formerly co-presidents and co-COOs. Bae and Nuttal both joined in 1996.

First cousins Kravis and Roberts, together with Jerome Kohlberg, established KKR in 1976. Going forward, they will remain active as executive co-chairmen of the firm’s board of directors.

Pete Stavros and Nate Taylor have since 2019 co-headed the Americas private equity business.

KKR kicked in a 7 percent GP commitment to Fund XIII’s $16.8 billion raised, according to the third-quarter results. Multiple pension systems have also disclosed commitments, among them California Public Employees’ Retirement System, California State Teachers’ Retirement System and New York State Common Retirement Fund.

KKR North America Fund XII was as of December 2020 generating a gross return (annualized) of 31 percent, KKR’s Investor Day presentation in April said.

In its third-quarter results, KKR reported a quarter-to-date gross return of 11 percent for all PE flagship funds as of September 30. For the last twelve months, the combined gross return was 79 percent.