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• Funds will invest in credit of oil and gas companies committed to reducing carbon emissions to zero by 2050 with credible decarbonization strategies
Private equity firm KKR & Co Inc (NYSE: KKR) is planning to launch its first two ESG credit funds later this year, Reuters reported on Thursday, citing an internal memo seen by the news outlet.
The funds dedicated to investing based on environmental, social and corporate governance (ESG) principles, offered to institutional investors and high-net-worth individuals, will be managed by KKR’s sustainable credit team led by Terry Ing and William Needham, Reuters reported.
The targeted size of the two funds is unknown.
The company will seek to outperform blended high yield and leveraged loan index benchmarks by delivering high-single-digit returns on a net basis, the news outlet reported citing a person familiar with the matter.
ESG investing is gaining popularity in capital markets as governments and companies are pushing to address challenges such as climate change and social inequality.
The report said the first fund, KKR Credit ESG Climate Opportunity Fund, will focus on climate change and invest globally in the publicly listed debt of companies that score highly on KKR’s “proprietary ESG scorecard,” and the second fund, KKR Credit ESG Accelerator Fund, will be focused on global sustainability deploying a range of private debt investing strategies including direct lending, junior debt, asset-based finance and opportunistic credit.
The funds will invest in the credit of oil and gas companies as long as they are committed to reducing their carbon emissions to zero on a net basis by 2050 or earlier and have credible decarbonization strategies, the source told Reuters.
KKR’s global head of public affairs and co-head of its global impact strategy, Ken Mehlman, will work closely with the new funds. The firm’s Sustainable Expert Advisory Council, chaired by Bob Eccles, will provide regular guidance and oversight, Reuters reported.
Picture Credit: Asia Nikkei
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