ImpactAlpha, Nov. 7 – The Global Impact Fund launched by KKR five years ago has become one of the private equity giant’s highest performing strategies. That helped KKR more than double the size of Global Impact Fund II, which clocks in at $2.8 billion.
The fund – which invests in climate solutions, sustainability, education and training, and inclusive growth – benefits from macro tailwinds around sustainability, resilience and geopolitics, KKR’s Ken Mehlman told ImpactAlpha. The pitch: build great companies “solving very big problems that often have both an economic imperative and also a sustainability imperative or a workforce imperative,” he said. “That combination is powerful.”
KKR will invest $250 million from its balance sheet alongside pension funds, insurance companies, family offices and other institutional investors.
KKR has staked out employee ownership as a key part of its private equity thesis. That’s filtering into funds such as Global Impact.
“The employee ownership toolkit is a critical value creation component of the impact strategy,” says Mehlman.
Four out of 18 portfolio companies across KKR’s two impact funds have employee ownership built in, including Utah-based edtech venture Graduation Alliance; Boston- and Moscow, Idaho-based labor economics provider Lightcast; and GreenCollar, an Australian environmental projects developer. KKR sold its GreenCollar stake to the Ontario Teachers’ Pension Plan in September.
“Our goal is to have (ownership) in as many companies as we can in the portfolio,” he said. “We are huge believers in the employee engagement model built around ownership.”