KKR & Co Inc is preparing to list a A$500 million (278 million pounds) credit fund in November in Australia, marking the U.S. buyout firm’s first investment vehicle in the country, two people with direct knowledge of the matter said.
The KKR Credit Income Fund is aimed at investor demand for higher-yielding products amid falling global interest rates, offering target annual dividend payments of 4% to 6%, the people said, declining to identified because they were not allowed to speak with media.
A KKR spokeswoman declined to comment on plans to list a credit fund on the Australian Stock Exchange, but said the firm was watching the “interesting space”.
Proceeds would be invested in KKR’s existing San Francisco-based Global Credit Opportunities Fund and “over time” would also be used to invest in its European Loan fund, the people said.
Brokers briefed on the plan this week expected the fund to be well received, given Australia’s central bank has lowered its cash rate to a record 1%, and financial futures are pricing in two further cuts by mid-2020, putting further pressure on bank deposits, said one of the people, who attended KKR presentations.
“Deposit rates have gone too low and investors need more income to live off, so a lot of them are looking for higher income levels than what the banks are offering in the market,” the person said.
The fund would charge 88 basis points in fees to pay for the cost of listing, which is estimated at about 2.5% of the funds raised, the people added.
KKR and its joint venture partners also plan to list their Southeast Asian online realtor PropertyGuru Group on the Australian Stock Exchange later this year, people with direct knowledge of the deal said.