KKR & Co. (NYSE: KKR), the private-equity firm run by Henry Kravis and George Roberts, finished raising $2 billion to invest in oil and gas assets, according to a person with direct knowledge of the matter.
KKR Energy Income and Growth Fund was started with capital from New York-based KKR and did three deals before gathering money from outside investors, said the person, who requested anonymity because the details haven’t been announced. KKR initially sought $1.5 billion for the strategy, people familiar with the plans said last year. Kristi Huller, a spokeswoman for the firm, declined to comment on fundraising.
Investors are seeking to take advantage of a boom in U.S. oil and gas supply available through hydraulic fracturing of shale rock, known as fracking. Carlyle Group LP co-founder David Rubenstein last year said energy is the most attractive area for investment, and Blackstone Group LP in 2012 closed its first energy fund with $2.5 billion, which was generating a 55 percent net internal rate of return as of Dec. 31.
(For more, see our May 2013 cover story "6 Signs of Recovery - Energy Funds Heat Up.")
Before gathering money from clients, KKR’s fund invested in drilling partnerships with Comstock Resources Inc., Raptor Petroleum LLC and Cinco Energy Services. The fund will focus on partnerships, mineral rights, royalties and mezzanine debt with the goal of producing consistent income, rather than on buying entire companies and selling them later for a profit, the person said.