Buyout firm Kohlberg Kravis Roberts & Co said on Tuesday it expects to start fundraising for its next private equity fund sometime in the next few quarters.
Investors have been anticipating KKR raising a new fund for more than a year, but do not expect it to be close to the size of the global $18 billion buyout fund it raised in 2006. KKR has about $5 billion left to spend from that fund, it said on a conference call for analysts on Tuesday.
KKR will start raising money for its next North American fund sometime in the next few quarters, executive Scott Nuttall said on the call.
KKR’s funds are not structured with a preferred return, it said. Funds typically have a hurdle of about 8 percent that they have to deliver to investors before taking their own share of the profits. KKR’s funds have not followed that structure, although it is unclear what the structure of its next fund will be.
KKR, which listed less than a month ago on the New York Stock Exchange, said on Monday it canceled plans to sell $500 million of new common units.
The firm gave two reasons for that decision on the conference call — volatility in the markets and to give it freedom to talk to investors and analysts. Having a stock offering open on file can place restrictions on what a company says to investors.
KKR could come back at a later date and try again with such an offer, or try other means of raising money. Rival Blackstone Group LP (BX.N) sold about $600 million in its first corporate bond offering in 2009.
KKR said on the call that, in the second quarter of 2010, the value of its private equity funds rose 3.5 percent and were up nearly 14 percent year to date.
The company reported earnings late on Monday, saying that economic net income, a measure used by private equity firms to report earnings, was $433.1 million for the quarter, compared with a pro-forma figure of $613.5 million a year ago.
Nuttall said he is not forecasting a double dip recession, but thinks sluggish growth will continue for a while.
Financing, however, is available for the right transitions and KKR’s deal pipeline is full, he added.
KKR’s shares were little changed in early afternoon trading, down 2 cents at $9.87.