Quiver Quantitative - KKR (KKR), a leading global investment firm, anticipates a surge in infrastructure deals in the upcoming year, according to Raj Agrawal, the firm's Global Head of Infrastructure. Agrawal, in a letter to investors, highlighted that the challenging macroeconomic landscape of inflation and rising interest rates has led to a valuation gap between buyers and sellers, thereby freezing many traditional credit markets. However, he remains optimistic about the potential for deals in sectors with robust market positions and regulatory safeguards, which provide both stability and growth opportunities.
KKR's infrastructure division, under Agrawal's leadership, is focusing on significant equity investments ranging from $1 billion to $5 billion. This strategy positions the firm in a unique competitive niche, given the limited number of firms capable of engaging in deals of this magnitude. The firm is set to play a pivotal role in major transactions, including contributing about $10 billion towards the acquisition of Telecom Italia’s landline network, a testament to its significant market influence and investment capacity.
The investment strategy of KKR's infrastructure group is two-fold, focusing primarily on digitalization and decarbonization. Another key area is deconsolidation, which involves complex carve-outs from larger corporations. In 2023, KKR has been notably active, securing deals such as acquiring a minority stake in SingTel’s data-center business and investing in the Port Arthur LNG Phase 1 project. Additionally, through its climate strategy, KKR is financing innovative companies like Zenobē, which specializes in transport electrification and battery storage solutions.
Looking forward, KKR is setting ambitious goals for its infrastructure investments. The firm is reportedly aiming to raise $20 billion for its fifth infrastructure fund, a move that underlines its commitment to expanding its footprint in the global infrastructure market. While a KKR spokeswoman declined to comment on the fundraising efforts, the target sum reflects the firm's confidence in the growing opportunities within the infrastructure sector.
This article was originally published on Quiver Quantitative