KKR, Capital Group team up to launch funds for rich investors

Capital Group and KKR & Co. partnered to debut two funds for wealthy individuals in the first half of next year that invest across public and private debt markets. 
The collaboration between Capital Group, an asset management firm, and alternative investment powerhouse KKR is the latest example of money managers creating private-investment offerings for individual investors, whose wealth is largely invested in public markets.

It’s also an example of how traditional asset managers such as Los Angeles-based Capital Group are trying to capture higher fees from managing illiquid and higher-risk assets, and catch the fast growth of private credit and alternatives investing. 

BlackRock Inc., the world’s largest asset manager, has notably been making a foray into private markets with the recent purchase of Global Infrastructure Partners and a potential new private acquisition in the works.

Capital Group and KKR had previously announced a partnership to create what they deemed a “new category” of hybrid public-private investments.

“Our goal is to jointly create a new public-private solutions category where we deliver ‘the best of both’ to our clients,” Capital Group Chief Executive Officer Mike Gitlin said Tuesday in a statement.

The funds — named Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+ — will invest in private corporate direct lending and asset-based finance instruments. They’ll be sold through US financial advisers and structured as interval funds that offer some liquidity to investors on a quarterly basis, according to two separate filings.

Capital Group and KKR funds will allocate around 60% of the funds’ assets to public credit and 40% to private credit assets. The skew between public and private could fluctuate significantly, the filings said. 

The two new strategies are expected to be offered to wealthy individuals and financial professionals to the US, but could also include non-accredited retail investors in a bid to access a broader investor base, according to a person familiar with the matter.