KKR launches new fund with a European focus – largest vehicle of its kind

KKR is invested in the media group Axel Springer

A large number of other investments are to follow. To this end, KKR is launching a fund with a European focus.

(Photo: dpa)

Frankfurt The financial investor KKR, which has invested in companies such as media giant Axel Springer, market researcher GfK and fintech Unzer, has collected eight billion dollars from investors for further European investments. KKR announced this on Tuesday morning. KKR’s European Fund VI is currently the largest dedicated European fund on the market.

“The risk profile is important to our investors. This is different with a European fund than with an Asia fund or a global fund in which all regions of the world are represented,” said Philipp Freise, co-head of the European private equity business at KKR, the Handelsblatt. For the investor, Europe is synonymous with Western Europe.

Private equity firms buy investment funds, parts of groups or medium-sized companies, rebuild them and sell them on after several years or list them on the stock exchange. European players such as CVC, EQT or Partners traditionally invest a third to more than half of the fund assets on their home continent.

In addition, some competitors have also set up funds specifically focused on Europe and others are in the planning stage. According to financial circles, Bridgepoint is currently raising money for a fund of this type worth seven billion euros, Carlyle 6.5 billion, Triton 5.5 billion and Bain five billion euros. The financial investors did not want to comment on the planned volumes.

KKR promises its financiers a return of 20 percent or a so-called “excess return” of ten percentage points above what could be earned with stock investments. “We’ll keep that stable over the cycles,” said Freise.

Private Equity: More reluctance, fewer deals

In view of the tense financing markets, private equity investors are currently finding it difficult to acquire new companies, especially larger deals. The timing for new investments is good, said Freise. “The best results are achieved in turbulent times.”

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There is little sign of reluctance to buy at KKR: in 2022, for example, KKR took over the cloud service provider Contabo in Germany and the bicycle manufacturer Accell in the Netherlands. In view of the difficult availability of outside capital, KKR is currently keen to pre-finance deals with equity, such as the French insurance broker April, whose takeover, worth a good two billion euros, financed KKR completely with equity in November, until around half of it was replaced by commitments from private credit funds.

>> Read here: The new modesty of private equity – takeovers in medium-sized companies instead of spectacular deals worth billions

KKR Germany boss Christian Ollig said that they see themselves as a “partner for family entrepreneurs”. Investments such as the engagements with the media group Bertelsmann and the flavor manufacturer Wild Flavors, which ended around ten years ago, are just as much references as the current ones at Springer or the software manufacturer Körber. “Trust is the most important thing and that agreements made are permanent,” said Ollig.

According to Freises, Germany should have a weight in KKR’s Investments that corresponds to that of its gross national product in a European comparison. In other words: about a quarter. The first steps on the way there should be taken soon: “One or two deals are currently in the final phase of negotiations, so the contract could soon be signed,” said Freise.

More: With these funds, private investors can invest like the super-rich

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