kkr nears completion raising 16.5 bn...

kkr nears completion raising 16.5 bn http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/09/27/cnkkr27.xml
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KKR to unveil world's largest buyout fund
By James Quinn, Business Correspondent (Filed: 27/09/2006)



Global private equity house KKR is set to unveil the largest buyout fund of its kind anywhere in the world. KKR is close to raising $16.5bn (£8.7bn) for its 2006 fund, outstripping the nearest private equity fund by £900m.

Commitments for its 2006 global fund are due to close in the next couple of weeks, but the total is understood to already be in excess of $16bn and it is understood it will close at or near to $16.5bn. The final total will not be known for a few weeks, but it is clear that the KKR's latest fund will be the biggest of its type globally.


The new fund eclipses rival Blackstone, which earlier this year seized the private equity crown after raising $15.6bn for its fifth global fund, which at the time was the largest to be raised. It follows the $5bn quoted fund KKR raised in Europe earlier this year, and the new €4bn fund it raised last year. The house is also believed to be working on plans to launch an Asian fund at some stage over the next six to 12 months.

KKR's 2006 global fund is the latest in a long series of big money fundraisings in the sector, fuelled by heightened interest in the returns that can be made from the specific type of investment such houses are involved in. KKR had originally indicated it planned to raise in the range of $14-$16bn when it launched the fund earlier this year. The glut of money available to private equity houses is being fuelled by the availability and low cost of debt, which is an intrinsic part of any deal of this type.

One of KKR's key rivals, Texas Pacific Group, is still raising money for its new fund, and it too indicated it wanted to raise in the region of $14-$16bn. Earlier this year, it was reported that investment bank Goldman Sachs was understood to have reined in its

fundraising efforts, scaling back its new private equity fund from an original $15bn to $10bn, although the bank remains silent on such speculation.

European funds have also been active this year. The Daily Telegraph revealed in July that British-based Permira was on track to raise €11bn (£7bn).

And last week it emerged that CVC is in the final throes of raising a €3-€4bn "side-car" fund to invest alongside existing CVC funds. KKR is perhaps still best known for its part in the 1988 five-week bidding war that led to the takeover of food company RJR-Nabisco, portrayed in the bestseller Barbarians at the Gate.

Since then KKR has grown to be one of the most pre-eminent private equity houses, and is involved in some way, even if it is only to look at it, in the majority of the major buy-out deals. It is currently involved in the $33bn buy-out of healthcare group HCA, the world's largest private equity buyout to date, eclipsing the $30.6bn buyout of RJR Nabisco, previously the biggest private equity buyout deal.

The firm was co-founded by Henry Kravis and George Roberts in 1976, since which time it has completed more than 140 transactions valued at approximately $215bn.

A KKR spokesman declined to comment."