The Times: KKR to invest $3.5bn in Europe: “KOHLBERG Kravis Roberts is planning to raise $3.5 billion (£2 billion) to invest in European companies, as the buyout firm looks to exploit the opportunities outside its “saturated” American home market.”: “KKR… has teamed up with Goldman Sachs Capital Partners to bid for Royal Dutch/Shell’s liquefield petroleum gas business, which is valued at £1 billion.” (ShellNews.net)
By Tom Bawden
October 19, 2004
KOHLBERG Kravis Roberts is planning to raise $3.5 billion (£2 billion) to invest in European companies, as the buyout firm looks to exploit the opportunities outside its “saturated” American home market.
KKR, best known for its $31 billion hostile takeover of RJR Nabisco in 1989, is sounding out potential investors and plans to begin formally fundraising next month. The fund would in effect give KKR more than $10 billion of buying power, since the firm typically funds about two thirds of each leveraged buyout using debt.
The company, which is this week expected to table a £1.5 billion offer for Warner Chilcott, the pharmaceuticals group, is one of several US buyout firms that have Europe firmly in its sights. Blackstone, Texas Pacific, Hicks, Muse, Tate & Furst, and Carlyle are among the American private equity firms that are devoting billions of dollars to Europe, which they believe offers much better investment opportunities than the “mature” US market.
KKR has been increasing the pressure on European companies ever since setting up its first dedicated fund for the region in 1999. In Europe’s largest leveraged buyout to date, KKR bought Legrand, the French plugmaker, from Schneider Electric in December 2002. A month later, the firm was forced to confirm it was considering a bid for Safeway, the UK supermarket group, although it eventually decided not to make an offer.
In June this year KKR narrowly missed out on buying the AA,, which was jointly acquired for £1.75 billion by CVC and Permira. The firm was also a serious contender for Four Seasons, Britain’s largest nursing home chain, which was sold for £775 million in July.
KKR, which retains a small stake in Willis after floating the UK insurance broker in 2001, has teamed up with Goldman Sachs Capital Partners to bid for Royal Dutch/Shell’s liquefield petroleum gas business, which is valued at £1 billion.
KKR will raise its new fund from financial institutions such as pension managers, insurance companies and banks, as well as wealthy individuals. Longstanding KKR investors, such as Oregon Public Employees Pension Fund and Washington State Investment Board, are expected to make commitments to the new fund.
The new fund coincides with the departure of Ned Gilhuly, head of KKR’s European investment team. Mr Gilhuly is returning to KKR’s Menlo Park office in California after six years and his replacement in Europe has yet to be named. Johannes Huth and Todd Fisher, two London-based partners, are understood to be the prime contenders for the job.
KKR will be competing for funds against firms such as Apax, BC Partners, CVC Capital Partners, Carlyle Group, PAI and Warburg Pincus as heavyweight buyout firms seek a record €42 billion (£29 billion) of new investment capital during the next 12 months, according to Thomson Venture Economics, the researcher.
Since KKR was set up in 1976 by Henry Kravis, George Roberts and Jerome Kohlberg, the firm has invested about $120 billion in more than 110 companies. Mr Kravis and Mr Roberts, who are both in their 60s, remain at the company, although Mr Kohlberg has since left to set up Kohlberg & Co, a rival firm.