The New Zealand Superannuation Fund has committed up to $250 million to invest in opportunities with Kohlberg Kravis Roberts that target the North American gas and oil sector, according to a KKR statement.
The Super Fund will put to $175 million into new KKR private equity investments in North American natural gas exploration and production, midstream, downstream and/or energy infrastructure and services.
The remaining $75 million will be invested with the $2 billion KKR Energy Income and Growth Fund, which looks for opportunities in unconventional gas and oil resources in North America.
“Developments in North American gas and oil are profoundly changing both global energy markets and markets within North America,” said Matt Whineray, the NZ Super Fund’s general manager, investments, in the statement.
“For example, there is a large and ongoing decline in the burning of coal in the US as energy utilities transition towards gas supplies. Access to these opportunities is, however, difficult to achieve solely through listed markets. Partnering with KKR will give us the benefit of their expertise and deep relationships in the energy sector.”
The KKR investment “was premised on attractive long-term returns in energy and significant market changes including the rapid development of natural gas and unconventional oil assets” the statement said.
Justin Reizes, member of KKR and head of KKR Australia, added: “The rapid development of unconventional shale basins provides attractive development and infrastructure investment opportunities for long-term investors such as the NZ Super Fund.”
The $25 billion NZ Super Fund has returned 9.57 percent on an annualised basis, after costs and before tax, since inception in 2003, according to the statement.
According to Infrastructure Investor’s Research & Analytics Division, NZSF does not have a target allocation for private equity and it expects to start new partnerships with more fund mangers. At the same time, the fund will decrease its number of future commitments but raise its bite size. NZSF is also open to co-investment opportunities.