KKR secures first Europe deal for new open-ended, core fund

Investing alongside OTPP, the duo have each acquired a 40% stake in Finnish electricity distribution provider Caruna from First Sentier and OMERS.

KKR has secured the first European asset for its new open-ended core infrastructure fund with the acquisition of a 40 percent stake in Caruna, Finland’s largest electricity distribution company.

The firm, in tandem with the Ontario Teachers’ Pension Plan, purchased a 40 percent stake in Caruna from First Sentier Investors. The duo have also agreed to acquire a further 40 percent from OMERS, with both transactions – whose size was not disclosed – split equally between them.

KKR and OTPP have also been joined by Swedish pension fund AMF, which has bought a 12.5 percent stake in the company from Finnish pension scheme Keva. Keva’s compatriot, Elo Mutual Pension Insurance Company, will remain a 7.5 percent shareholder, as it “wants to continue as the company’s domestic committed owner and long-term infrastructure investor”, chief executive Satu Huber said in a statement.

OMERS and First Sentier – through its 2012-vintage European Diversified Infrastructure Fund I – bought the company from Finnish utility Fortum in a 2013 deal worth €2.5 billion. First Sentier is currently winding down the 2012 vehicle, while OMERS is believed to have only decided to sell once KKR and OTPP had submitted their offer to First Sentier.

KKR confirmed the deal had been pursued through its core infrastructure strategy. The strategy was introduced last year through the launch of a new open-ended fund named KKR Diversified Core Infrastructure Fund, targeting returns of between 8 and 10 percent. The strategy is led in Europe by Oleg Shamovsky. KKR stated in its earnings release last month that it had raised the “first dollars” for the new vehicle, although declined to specify the amount.

The Caruna deal is the second to be agreed by the fund after KKR late last year invested about $1.4 billion in a 1.6GW portfolio of wind and solar assets in the US owned by NextEra Energy.

The US manager has recently closed its debut $3.9 billion Asia-Pacific infrastructure fund, with its regional infrastructure executive team telling us its bullish on APAC’s “great tailwinds”.