The Oregon Investment Council approved a $525 million commitment to KKR’s new buyout fund, helping the New York-based firm toward a target of raising between $8 billion and $10 billion.
Oregon’s fees in the new KKR North American XI Fund will be the lowest the state has paid for any KKR fund it has invested in, said James Sinks, a spokesman for the Oregon State Treasury, in an interview. Sinks couldn’t immediately provide details of the fees.
“It’s a good time to invest,” George Roberts, KKR co-founder, told the Oregon Investment Council during his fund-raising pitch today in Tigard, Oregon. “You can make reasonable investments in companies with good financing at not cheap prices, but at fair prices.”
U.S. pension funds, faced with as much as $3 trillion in unfunded pension liabilities, are seeking higher yields to meet their obligation. Pension plans provided about 40 percent of all leveraged buyout funds since 2005, and they may help firms rebound from the worst fundraising year since 2004, research firm Preqin said. Oregon has invested with KKR since 1978 and has gotten returns of 18 percent on average.
The Oregon Investment Council said $500 million of the commitment will come from the Oregon Public Employees Retirement Fund and $25 million from the Common School Fund.
The target size of the new fund may still change, according to the council. KKR’s previous U.S. buyout fund, which was raised in 2006, closed at $17.6 billion. Blackstone Group LP raised $15 billion for its latest private-equity fund, 30 percent less than its $21.7 billion predecessor.
Kristi Huller, a spokeswoman for KKR, declined to comment on the fundraising target.
Roberts said he and his cousin Henry Kravis have no plans to step away from the business.
“We’re not about to go anywhere in the near term,” Roberts told the pension trustees. “Longer term, we understand the need to provide succession for the firm,” he said.