Kohlberg Kravis Roberts & Company is expanding its business of investing in distressed debt, with a new $2 billion fund.
The big investment firm said on Thursday that the amount of money raised for the fund was double the initial goal of $1 billion, reflecting investors’ confidence in K.K.R.’s ability to identify debt investments at bargain prices. The fund, intended for so-called special situations investments, began soliciting money from outside investors in 2012.
The fresh pool of capital underscores the diversity of businesses housed within K.K.R., a firm best known for its private equity buyouts. The special situations business, which started in 2010, has now grown to about $4 billion in assets under management, the firm said on Thursday.
It is part of K.K.R.’s $20.9 billion credit business, which is expected to swell to about $29 billion after the recent acquisition of Avoca Capital, a European debt investment firm. Over all, K.K.R., led by the cousins Henry R. Kravis and George R. Roberts, had $90.2 billion of assets under management as of Sept. 30.
“We are pleased we were able to attract such a diverse mix of new and existing K.K.R. investors to the fund and the strategy,†Jamie M. Weinstein, the firm’s co-head of special situations, said in a statement. “We are very optimistic about the global opportunity set and continue to find attractive ways to put capital to work.â€
The special situations business looks for debt assets it considers to be undervalued, whether from market factors or particular events. Before raising the new fund, the business invested on behalf of its clients through separate accounts.
From its inception in 2010 through the third quarter of 2013, the special situations strategy has yielded a gross internal rate of return of 20 percent, K.K.R. said. That metric does not account for fees.
