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KKR Pours $300M Into Troubled Fund
11 May
Summary
- KKR injects $300 million into its FS KKR Capital Corp. fund.
- Fund's net asset value dropped 9.9% in Q1, facing troubled loans.
- KKR waives incentive fees and launches a share repurchase program.
KKR & Co. is injecting $300 million into FS KKR Capital Corp., a private credit fund it manages. This significant investment includes $150 million in preferred equity and a tender offer for $150 million of common shares at $11 each.
The fund, managing $12.3 billion, has faced pressure due to mounting troubled loans and widening losses. Its net asset value decreased by 9.9% in the first quarter, reaching $18.83 per share. The proportion of non-accrual loans rose to 4.2% of the portfolio's fair value.
In response, FS KKR's board authorized a $300 million share repurchase program, set to run for about a year. Additionally, KKR has agreed to waive its incentive fees for four quarters, aiming to support investment income and distributions.
Company leadership stated that the current stock price undervalues the long-term potential of the investment portfolio and the KKR Credit platform. These strategic actions are intended to reflect confidence in the fund's prospects and align with shareholder interests.
