KKR & Co Inc (NYSE:KKR) is reportedly targeting $20 billion from investors for its latest North America private equity fund, North America Fund XIV.
This comes three years after the firm launched a predecessor fund of similar size. With $578 billion in assets under management as of March, KKR is navigating a challenging fundraising environment, where high interest rates have made refinancing and asset sales more difficult.
The new fund, which began marketing to investors this month, aims for a net internal rate of return (IRR) in the high teens and plans to deploy 20% to 25% of its capital annually, reported Reuters.
KKR's previous North American fund, launched in 2017, achieved a net IRR of 20.5% as of March.
The firm's fundraising efforts will test investor confidence in KKR's recent performance in regional buyouts. For comparison, Carlyle Group Inc's (NASDAQ:CG) 2018 fund reported a net IRR of 8%, and Bain Capital's 2017 fund reported a net IRR of 17.1%, the report highlighted.
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Despite the challenges, KKR remains optimistic. CFO Robert Lewin noted at a recent summit that fundraising conditions have improved over the past year.
KKR has raised approximately $180 billion from early 2022 to the first quarter of 2024. Additionally, KKR has committed to offering equity to rank-and-file employees of its portfolio companies in North America, a program initiated by KKR's global private equity co-head Pete Stavros.
This initiative has reportedly led to higher revenue, improved productivity, and lower turnover.
KKR's broad-based employee ownership program has generated significant additional income for employees at its portfolio companies.
Co-founder and co-executive chair Henry Kravis highlighted the program's success at CHI, a former KKR-owned garage door business, where employees saw an average increase of $175,000 in income.
KKR stock has gained more than 105% in the last 12 months. Investors can gain exposure to the stock via Northern Lights Fund Trust IV FMC Excelsior Focus Equity ETF (NYSE:FMCX) and EA Series Trust WHITEWOLF Publicly Listed Private Equity ETF (BATS:LBO).
Price Action: KKR shares are trading higher by 0.23% at $109.16 at last check Monday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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