New Mexico State Investment Council, Santa Fe, on Tuesday committed up to $100 million to KKR Diversified Core Infrastructure Fund.
This is KKR's first core infrastructure open-end fund. It is expected to invest in the energy transition, utilities, power and renewables, telecommunications, transportation and social infrastructure sectors. The fund expects to invest in North America, western Europe, and developed countries in Asia.
The fund has already closed on $3 billion with another $1 billion expected by June 30, Paul Chapman, the endowments' director of real estate and real assets, told the council at its meeting Tuesday. The fund is targeting $5 billion.
"The fund is effectively a blind pool at this stage," according to a report to the council by its real asset consultant Townsend Group. Mr. Chapman said investors will not be able to redeem their capital from the fund for six years, allowing the fund to achieve scale.
KKR's plan is to invest $1 billion to $2 billion each year in two to three transactions. The fund has a goal of reaching 10 to 15 investments over five years. KKR has closed two transactions to seed the fund, requiring $2.3 billion in capital, with $650 million from the fund and about $1.7 billion from KKR's co-investors.
Mr. Chapman also mentioned an April 14 report by Private Equity Stakeholders Project, a non-profit that receives funding from unions and other non-profits, that KKR's portfolio company, Spur Energy Partners has had nearly 20 oil-spill incidents in 2021, spilling about 500 barrels of oil in Eddy and Lea counties in New Mexico where the population is majority Latino.
Ken Mehlman, partner, global head of public affairs and co-head of KKR global impact, told the council that the oil spills were the result of the freeze in the region that caused infrastructure equipment failures.
While 45 barrels of oil were spilled by Spur, the majority of the liquid was water and not oil, Mr. Mehlman said. He added that the oil spills occurred two miles or more from neighborhoods and that the "vast majority of the fluids were recovered."