KKR finalized $2.1 billion in commitments for its first fund dedicated to asset-based finance investment, KKR Asset-Based Finance Partners.
Asset-based finance has been a prime arena within private credit as of late and KKR already has $35 billion in ABF assets with executives at the firm expecting a greater number of opportunities across the ABF universe. The new fund consists of privately originated and negotiated credit investments that re backed by large and diversified pools of financial and hard assets.
KKR Partners and Co-Heads of Private Credit Dan Pietrzak and Matthieu Boulanger said that the current $4.5 trillion ABF market is “one of the most compelling and fastest-growing opportunities” within the firm’s $71 billion private credit business.
KKR invested approximately $150 million alongside external investors through its balance sheet and employee commitments.
Demand in ABF has been driven by global bank deleveraging and the need for fast and sophisticated credit solutions and the inability of traditional capital to provide them, according to the KKR Managing Directors who oversee the ABF investment strategy Avi Korn, Chris Mellia and Varun Khanna. “We believe that the global footprint and breadth of our ABF strategy positions us well to serve this need and to source differentiated opportunities with compelling risk-adjusted returns,” the trio stated in an announcement.
Four key themes are part of the ABF program: consumer/mortgage finance, hard assets, small-medium enterprise and contractual cash flows. KKR said it has established lending businesses in partnership with experienced industry management teams to pursue opportunities in lending markets that the firm views as attractive. These partnerships span a range of industries that include aviation, real estate, automotive finance, mortgages, royalties and equipment leasing.
Since 2016, KKR has put more than $6 billion across 54 investments in ABF globally via a combination of portfolio acquisitions, platform investments and structured investments. The firm now has a team of 35 investment professionals focused on ABF.
The global alternative investment firm’s credit platform dates back to 2004 with the first private credit investment in 2005. The division has grown its credit division to $184 million, which includes $71 billion in private credit, $102 billion in leveraged credit and $10 billion in strategic investments.
