KKR, a global private equity firm with $367bn of assets under management (AUM), has grown its infrastructure platform considerably in recent years, by providing capital from its Global Infrastructure Investors funds to investment opportunities in power & utilities, midstream, alternative energy, transportation, asset leasing, water & wastewater, and digital infrastructure. Geographically, KKR’s infrastructure strategy invests in existing assets and businesses located in North America, Western Europe, and Asia.
Led by Raj Agrawal, KKR’s Global Head of Infrastructure, the Global Infrastructure Investors funds have grown successively larger with each vintage. Indeed, Fund I had $1.0bn of capital commitments, while Fund II grew to $3.1bn of capital commitments, and Fund III more-than-doubled to $7.4bn of capital commitments.
Furthermore, as reported by Reuters, KKR is seeking $12bn of capital commitments for its fourth fund, namely Global Infrastructure Investors IV. This notion was in-part confirmed by KKR’s June 2021 announcement that it would purchase Atlantic Aviation (a non-digital infrastructure business), through its Global Infrastructure Investors IV investment vehicle, from Macquarie Infrastructure for $4.5bn.
Concurrent with the growth of its funds, the prevalence of digital infrastructure investments in KKR’s Global Infrastructure Investors portfolio has become more pronounced with each successive fund. Specifically, the firm has invested across the three major sub-sectors of digital infrastructure being towers, data centers, and fiber.
Below we outline several of the digital infrastructure assets and businesses that KKR has acquired through its three seasoned Global Infrastructure Investors funds.
KKR Global Infrastructure Investors Fund – $1.0bn
KKR’s $1.0bn Global Infrastructure Investors fund began its investment period in September 2011 and ceased investing in October 2014. As of March 31, 2021, this fund had returned a gross IRR of 17.6%, net IRR of 15.6%, and gross multiple of invested capital of 2.1x.
For this first fund, KKR did not make digital infrastructure investments a major component of its portfolio.
KKR Global Infrastructure Investors II Fund – $3.1bn
KKR’s $3.1bn Global Infrastructure Investors II fund began its investment period in October 2014 and ceased investing in June 2018. As of March 31, 2021, this fund had returned a gross IRR of 21.5%, net IRR of 18.7%, and gross multiple of invested capital of 1.9x.
Overall, we outline investments that KKR’s Global Infrastructure Investors II made, including Deutsche Glasfaser, Indus Towers, Telxius Telecom, and Hivory.
Deutsche Glasfaser
Deutsche Glasfaser is a German fiber-to-the-home (FTTH) business. KKR announced its acquisition of a majority stake in Deutsche Glasfaser in July 2015. Ultimately, in February 2020, KKR sold the business to EQT Infrastructure and OMERS.
Indus Towers (formerly Bharti Infratel)
Indus Towers is a telecommunications tower operator in India which owns 179k towers with 322k tenants. KKR invested in Indus Towers in 2017 and subsequently the company was merged with Bharti Infratel in November 2020. Presently, KKR maintains a minority shareholding in Indus Towers.
Telxius Telecom
Telxius provides telecom infrastructure in Europe and the Americas, operating through its subsea cable and telecommunications tower segments. KKR announced its investment in Telxius Telecom in February 2017. Most recently, Telxius has completed the sale of the majority of its tower assets to American Tower, with ~4k rooftop sites in Germany still pending.
Hivory
Hivory was established over the course of 2017 and 2018 as a carve-out from SFR (Altice Europe), a wireless carrier in France. Indeed, Hivory is the largest tower company in France with its nationwide presence of 10.5k towers. KKR announced its creation and acquisition of a 49.99% stake in Hivory in December 2018.
Subsequently, in February 2021, Altice France and KKR announced the sale of their joint venture to Cellnex Telecom for €5.2bn. The deal is expected to close in the second-half of 2021.
KKR Global Infrastructure Investors III Fund – $7.4bn
KKR’s $7.4bn Global Infrastructure Investors III fund began its investment period in June 2018 and the firm will be able to continue investing out of this vehicle until June 2024. As of March 31, 2021, this fund had returned a gross IRR of 7.3%, net IRR of 3.4%, and gross multiple of invested capital of 1.1x. However, this fund has not fully seasoned and therefore, these returns will likely improve over time.
Overall, we outline investments that KKR’s Global Infrastructure Investors III made, including Hyperoptic, Global Technical Realty (GTR), FiberCop, Pinnacle Towers, Telefónica Fiber InfraCo, Open Dutch Fiber, and MetroNet.
Hyperoptic
Hyperoptic is a United Kingdom-based fiber-to-the-home (FTTH) operator. KKR announced its acquisition of a majority stake in Hyperoptic, at a £500m valuation, in October 2019.
Global Technical Realty (GTR)
Global Technical Realty (GTR) is a build-to-suit (BTS) data center developer, owner, and operator in Europe. Presently, GTR is building a data center campus in Slough, UK (London), with an IT load of 40.5 megawatts. KKR announced its $1bn commitment to Global Technical Realty (GTR) in May 2020.
FiberCop
FiberCop is a joint venture between TIM (Telecom Italia), KKR, and Fastweb, to bring fiber optic connectivity throughout Italy. KKR announced its purchase of a 37.5% stake in FiberCop in August 2020. Subsequently, the firm closed the deal in April 2021.
Pinnacle Towers (Frontier Tower Associates)
Pinnacle Towers is an independent telecommunications tower company that operates in the Philippines, through its subsidiary Frontier Tower Associates. Specifically, the company has undertaken build-to-suit (BTS) tower projects for Philippines wireless carrier Globe Telecom. KKR announced its investment in Pinnacle Towers in November 2020.
Telefónica Fiber InfraCo
InfraCo represents Telefónica Chile’s existing fiber network, which is the largest fiber optic network in Chile. Additionally, Telefónica and KKR’s business plan envisions building further fiber optic infrastructure in the country. KKR announced its acquisition of a 60% stake in InfraCo during February 2021. Subsequently, the firm closed the deal in July 2021.
Open Dutch Fiber
Open Dutch Fiber is a fiber-to-the-home (FTTH) platform that will deploy fiber infrastructure in the Netherlands, to urban and higher population density areas. KKR announced its acquisition of a majority stake in Open Dutch Fiber in April 2021. Subsequently, the firm closed the deal in Q2 2021.
MetroNet
MetroNet is a fiber broadband provider in the Midwest whose services include internet, phone, and IPTV. Indeed, the company delivers these services all via fiber infrastructure. KKR announced its investment in MetroNet in April 2021, with the deal expected to close in Q3 2021.
