KKR’s first listed closed-end fund, KKR Income Opportunities Fund, has completed its initial public offering and began trading on the New York Stock Exchange on 26 July under the symbol KIO.
The fund raised USD305m in its common share offering, excluding any exercise of the underwriters’ option to purchase additional shares. If the underwriters exercise that option in full, which may or may not occur, the fund will have raised USD352m.
“Increasingly, individual investors are seeking exposure to strategies to diversify beyond traditional long only equity and bond funds. We believe that alternative investments represent an important aspect of all investors’ asset allocation as they can deliver attractive risk-adjusted returns. We’re pleased by investors’ reception of KKR’s first entry into the closed-end marketplace,” says George Roberts, co-founder and co-chief executive of KKR.
KKR Asset Management (KAM) serves as the fund’s investment adviser. Launched in 2004, KAM is a subsidiary of KKR. KAM is a manager of non-investment grade debt and public equities. Its investment teams, which are organised by industry, invest across the capital structure with the goal of protecting capital and achieving attractive risk-adjusted returns. The investment process for the fund is substantially based on the investment process of KAM’s high yield, bank loans and special situations strategies. The fund will be managed by Chris Sheldon and Erik Falk, co-heads of leveraged credit, and Nat Zilkha and Jamie Weinstein, co-heads of special situations.
KKR Income Opportunities Fund is a recently organised non-diversified, closed-end management investment company. The fund’s primary investment objective is to seek a high level of current income with a secondary objective of capital appreciation. The fund will seek to achieve its investment objective by investing primarily in first- and second-lien secured loans, unsecured loans and high yield corporate debt instruments. It will employ a dynamic strategy of investing in a targeted portfolio of loans and fixed-income instruments of US and non-US issuers and implementing hedging strategies in order to seek to achieve attractive risk-adjusted returns.
Lead managers of the underwriting syndicate were Morgan Stanley, Citigroup and UBS Investment Bank. KKR’s strategic advisor and distribution manager was Four Wood Capital Partners (FWCP), an independent investment management and advisory services firm. Advisors Asset Management, an investment solutions partner for advisors and broker/dealers offering financial tools, technologies and industry expertise, also acted as a sub-contracted distribution partner to FWCP.
