iCapital leverages KKR to lure investors into private equity

In an effort to expand access to alternative investment strategies among the mass affluent, iCapital Network is joining forces with private equity powerhouse KKR.

The partnership, which was announced Wednesday, involves offering a rebranded $430 million private investment fund through the iCapital platform to accredited investors for a $25,000 minimum investment.

The fund, originally launched in 2015 as the Altegris KKR Commitments Market Fund, is already invested in 400 underlying private companies, 88% of which come through KKR sourced funds and deals.

The KKR brand is expected to help boost appeal of the strategy, which has produced 8.7% annualized performance net of fees since inception with less than 45% of the volatility of the public equity markets, according to Doug Krupa, co-head of KKR’s private wealth partners group.

The fund, which is technically a closed-end fund, is being managed by iCapital RF Adviser, a registered investment adviser and subsidiary of iCapital. The adviser is also less than 25% owned by KKR.

“This is the first time a private equity sponsor owns a piece of a democratized fund,” Krupa said.

Further leveraging the KKR brand, the fund is designed to invest and make capital commitments of at least 80% of its assets to private equity investments of any type sponsored or advised by KKR.

Lawrence Calcano, chairman and chief executive of iCapital, said the appeal for financial advisers is the ability to give clients access to KKR-caliber private investments.

“What is good for iCapital is derived from what is good for investors,” he said, citing the 13 million American households that would qualify based on net worth as eligible to access the fund.

“Democratized access is the mission we’re pursuing,” Calcano added.

The fund charges a 1.25% management fee and offers quarterly liquidity equal to 5% of the fund’s total assets, meaning it is not designed for short-term investors.

“The iCapital RF Adviser team has a deep understanding of the drivers of long-term performance in private equity and iCapital’s familiarity with the needs and preferences of the financial advisers and high-net-worth investors positions them to deliver a diversified fund with exposure across KKR’s global investment strategies,” Krupa said.