KKR turns to impact fund co-investing with $510 mn deal

NEWYORK: KKR & Co. is bringing its impact fund into a deal for an Indian waste-collection company, seeking to boost sustainability and profitability through a new co-investing strategy.

The $510 million transaction for a 60% stake in Ramky Enviro Engineers Ltd closed on Monday, the firm said in a statement. The acquisition is KKR’S second, and biggest, impact deal, after it bought a stake in Singapore energy-efficiency company BBP in December for as much as $33 million.

KKR and private equity rivals including Bain Capital and TPG have dived into impact-investing strategies in the past two years, launching funds devoted to sustainability. KKR’S pairing of the impact fund with its existing regional vehicle is a different take on that model. The Ramky purchase was announced in August through KKR’S Asian Fund III, and the impact pool later joined as part of the private equity giant’s effort to help support the United Nations’ sustainable development goals and speed up progress on Narendra Modi’s “Clean India” mission to improve sanitation.

“We wanted to be able to deliver all of KKR around the impact strategy,” Ken Mehlman, co-head of KKR Global Impact, said in an interview. “In this case, the more waste that Ramky is able to responsibly treat, process and recycle, the more money the company’s going to make.” KKR declined to say how the two funds split the investment, though the firm has said it is generally looking at deal sizes around $50-75 million for the impact fund.