Yahoo Finance KKR Investment Vehicle for Mass Affluent Raises $1.8 Billion
(Bloomberg) -- KKR & Co.’s effort to reach the so-called mass affluent raised $1.78 billion from more than 12,000 investors in a single vehicle.
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KKR Infrastructure Conglomerate, which began raising money in June, is one of two companies KKR formed to attract capital from wealthy individuals who don’t necessarily meet the minimum investment threshold to invest in a traditional private fund. The other is KKR Private Equity Conglomerate.
The infrastructure vehicle received backing from 12,632 investors, according to a filing last week, which amounts to roughly $141,000 per investor.
A KKR spokesperson declined to comment.
The KKR conglomerates represent an emerging way of doing business for alternative investment firms, which have traditionally relied on raising large amounts of money from institutions such as pensions and endowments.
In the past couple of years, these larger investors have reined in private equity investments amid elevated interest rates and economic uncertainty — spurring KKR and competitors such as Blackstone Inc. and Apollo Global Management Inc. to pursue well-off individuals.
KKR Infrastructure and KKR Private Equity represent the first time KKR has opened these types of deals to accredited investors, defined as individuals who, among other things, have a net worth of more than $1 million, not including their primary residence.
Raising billions of dollars from accredited investors requires KKR to reach far greater numbers of people, and to change the way it markets its funds. Instead of in-person meetings with the chief investment officer and trustees of a large pension fund, KKR has to conduct widespread outreach and education through webcasts to individual investors and their financial advisers.
The number of people who invested in KKR Infrastructure exceeds the figure given in the filing, according to a person familiar with the fundraising. That’s because the investor count in the filing includes feeder-type funds that pooled capital from more than one person.
Federal rules typically impose additional requirements on funds that raise money from more than 100 accredited investors, such as limits on leverage.
KKR’s infrastructure and private equity conglomerates aren’t subject to the 100-investor ceiling, though, because they’re structured as operating companies rather than as funds.
Both conglomerates own businesses and hard assets — such as airports and toll roads – along the lines of Warren Buffett’s Berkshire Hathaway Inc.
An affiliate called KKR Alternative Assets also provided seed money, increasing the total amount raised to $2.39 billion. After it began raising money from outside investors, KKR Infrastructure repurchased its shares held by KKR Alternative Assets.
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