KKR (NYSE:KKR), the private equity firm headed by Henry Kravis and George Roberts, is working on a fund that will allow retail investors to participate for as little as $10,000. This would be the first time KKR allowed smaller investors to contribute to its pool of capital.
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The new fund, revealed in an SEC filing, will be managed by Altegris Advisors and named Altegris KKR Private Equity Master Fund. StepStone Group will serve as the fund’s sub-adviser.
Traditionally, private equity firms have raised capital from pension funds and institutions. This new fund will give KKR an opportunity to attract capital from a vast new pool of investors.
KKR rival, Carlyle Group, began allowing investors to commit as little as $50,000 last year, in a partnership with Central Park Advisers. Bringing on third-party firms allows KKR and Carlyle to avoid regulatory loopholes.
To participate in KKR’s new fund, one must be labeled an “accredited investor.” To qualify, net worth must exceed $1 million, excluding their primary residence. Private equity firms are generally open to “qualified purchasers," which includes investors who have $5 million in investments or institutions that have $25 million.
The new fund plans to invest greater than 70% of its assets in private equity funds and companies run by KKR. Participants will be charged a 1.2% annual management fee.
Investors may opt to sell shares on a new platform for secondary trading, known as the Nasdaq Private Market. Nasdaq (NASDAQ:NDAQ) has joined forces with SharesPost to trade shares of private companies.
KKR did not respond to requests for comment, and Nasdaq declined to comment.
KKR shares are down about 1.7% Friday morning at $23.09 and off 5.1% this year.