KKR’s global climate fund is approaching an initial close at almost USD 3bn in commitments, according to three sources.

The target range is set at USD 6bn to USD 7bn. A hard cap has not been fixed.

The initial close will be held before year-end, after which the KKR Global Climate Fund hopes to hit a first close in March 2025, the sources said.

The first close, initially slated for the second quarter of 2024, was delayed due to a longer-than-expected internal compliance and due diligence process among limited partners (LPs), one of the sources said.

KKR wants to make at least 15 investments globally from the debut energy transition vehicle, most of which will be in the US and Europe, the first source said. The fund, which has made three investments so far, is aiming to commit to an additional three deals in its pipeline before year-end, he said.

KKR’s Global Climate Fund will carry a 12-year lifespan and target a high-teens gross internal rate of return, said the first source.

Launched in 2023, the new investment vehicle focuses on renewables, transportation, and decarbonisation in the US, Western Europe and the Asia Pacific. Cheques will range from USD 300m to USD 750m.

On 27 September, KKR announced a USD 200m commitment from Spanish bank BBVA to its Global Climate strategy.

KKR has also launched a parallel Asia-dedicated climate vehicle owing to investor appetite for regional exposure. The Asia Climate Fund is targeting USD 700m-1bn and has secured an anchor LP commitment from the Hong Kong Monetary Authority.

The Asian climate vehicle is structured as a separately managed account and is no longer open to new LPs, two of the sources said.

KKR established the global climate strategy last year, co-led by partners Emmanuel Lagarrigue and Charlie Gailliot.

It has so far invested in London-headquartered transport electrification firm Zenobē, California-based solar developer Avantus, and IGNIS P2X, a green hydrogen and ammonia joint venture in Spain.

To date, KKR has invested more than USD 21bn in renewable energy and climate opportunities from its infrastructure platform.

KKR declined to comment on fundraising.

[Editor’s note: The article has been updated post-publication to note that KKR declined to comment.]