KKR has completed a $6.5bn (£4.9bn) asset-backed finance (ABF) fundraise, citing a “relatively undercapitalised” opportunity in the market.
The fundraise – which included $5.6bn in KKR Asset-Based Finance Partners II (ABFP II) – focused on credit investments that are backed by large and diversified pools of financial and hard assets, and included nearly $1bn from separately managed accounts seeking similar investment opportunities.
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The global investment firm said ABFP II received backing from a diverse group of new and existing investors globally, including public and corporate pensions, sovereign wealth funds, private banks, insurance companies, asset managers, and family offices.
“The $6tn asset-based finance market, projected to exceed $9tn by 2029, is one of the most dynamic opportunity sets today, yet it remains relatively undercapitalized,” said Daniel Pietrzak, partner and global head of private credit at KKR.
“ABFP II will help fill this gap by providing long-term capital to the real economy and offering investors a chance to diversify their portfolios with high-quality non-corporate collateral-backed cash flows.”
Read more: AllianceBernstein: Asset-based finance ‘a burgeoning market yet to be tapped’
KKR established its ABF strategy in 2016 and now oversees more than $74bn in ABF assets under management.
Its ABF business operates two strategies, including an “opportunistic approach” and a high-grade strategy that focuses on investment grade opportunities at the top of the capital structure.
KKR’s ABF portfolio has four key themes covering consumer/mortgage finance, commercial finance, hard assets, and contractual cash flows, with 18 “captive” ABF platforms across these four segments, enabling proprietary sourcing and structuring of investments.
“Our extensive experience and global scale in ABF uniquely positions us to capitalize on the dynamic opportunities we see across various sectors and geographies,” said Varun Khanna, Avi Korn, and Chris Mellia, global co-heads of ABF at KKR, adding that ABPF II is more than 2.5x the size of its predecessor.
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