KKR’s inaugural Ascendant vehicle rakes in initial $1.9bn

KKR Ascendant Fund, unveiled last year by KKR to invest in North American mid-market businesses, raised just over $1.9 billion of initial commitments.

The amount was disclosed in Form D documents filed this week. KKR has not disclosed the offering’s target; however, Bloomberg in 2022 reported it is seeking as much as $5 billion.

The Ascendant strategy, part of KKR’s $165 billion global private equity franchise, was set up to pursue opportunities in the same areas of interest as the Americas platform, but with an eye on the mid-market. As such, activity would mostly involve small-cap control investing in sectors like consumer, finance, healthcare, industrials, media, software and services.

Other details, such as the specific characteristics of target companies and the range of equity check sizes, are not known. KKR declined to comment.

KKR Ascendant Fund is likely one of several new adjacencies the firm has created in recent years to capture deal flow in niche and smaller spaces no longer suitable to its ever-growing flagship strategy. KKR North America Fund XIII, for example, closed last year at $19 billion, 36 percent above its 2017-vintage predecessor.

Since launching, KKR Ascendant Fund has made three investments, which perhaps provide additional clues concerning its focus.

Last year, the fund closed its first investment, acquiring a majority stake in Alchemer, a customer experience and voice-of-the-customer software provider. Shortly thereafter, it backed the merger of Peloton Capital-backed 123Dentist and Sentinel Capital Partners-backed Altima Dental, alongside Lapointe Group, establishing a new dental support organization.

And in January, KKR announced that the vehicle invested $250 million in an acquisition and build-up business geared to the testing, inspection and certification industry. The deal was done in partnership with Amit Agarwal, a former Thermo Fisher Scientific executive, and Andy Silvernail, a former IDEX Corp executive.

The fund partnered with Agarwal and Silvernail because the sector has “a lot of really great characteristics that we like,” Brandon Brahm, co-head of the Ascendant strategy, told PE Hub. “Markets such as life sciences and food safety have durable secular trends, where the products and services are very technical and mission-critical, and yet the markets are very fragmented.”

The fund is expected to deploy employee ownership schemes in its deals. KKR, a private equity pioneer of employee ownership, has since 2011 expanded the practice across the Americas platform. It this year won Buyouts’ Deal of the Year for the 2022 exit from CHI Overhead Doors, an investment where employee ownership was key to the firm’s 10x return on original equity invested.

Alchemer and the Agarwal-Silvernail business both agreed to implement the employee ownership model.

Brahm, who joined KKR in 2010 from Goldman Sachs, shares leadership of the Ascendant strategy with Nancy Ford, who came onboard in 2017 from FFL Partners.