KKR Income Opportunities Fund raises $305 million in IPO

By Toni Weeks

San Luis Obispo, Calif., Aug. 1 - The KKR Income Opportunities Fund raised $305 million in its initial public offering, according to a press release. The fund began trading on the New York Stock Exchange on July 26 under the symbol "KIO" and is the first closed-end offering from KKR & Co. LP.

The common-share offering, for 15.25 million shares at $20 apiece, was led by Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., UBS Securities LLC and Barclays, according to a previous 497 filing with the Securities and Exchange Commission. The underwriters have a greenshoe for an additional 2,287,500 shares, which, if exercised, could add an additional $45.75 million to proceeds.

"Increasingly, individual investors are seeking exposure to strategies to diversify beyond traditional long-only equity and bond funds," George Roberts, co-founder and co-chief executive officer of KKR, said in the release. "We believe that alternative investments represent an important aspect of all investors' asset allocations as they can deliver attractive risk-adjusted returns."

As previously noted, the recently organized, non-diversified, closed-end management investment company seeks a high level of current income with a secondary objective of capital appreciation. Under normal market conditions, the fund will invest at least 80% of its managed assets in loans and fixed-income instruments, including derivative instruments. The fund expects to invest primarily in first- and second-lien secured loans, unsecured loans and high-yield corporate debt instruments.

The investment management team includes Erik A. Falk, Christopher A. Sheldon, Jamie M. Weinstein and Nathaniel M. Zilkha.

The sales load is 4.5%. Including a 1.65% management fee, total annual expenses will be 2.65%. If the fund does not utilize leverage, the management fee will be 1.1%, and the total annual expenses will be 1.42%.

San Francisco-based KKR Asset Management LLC is the investment adviser.

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