NZ Super Adds to Energy Exposure with KKR

(March 24, 2014) – The New Zealand Superannuation Fund has inked a deal with private equity giant KKR to boost its exposure to oil and gas.

The NZ$25.5 billion (US$21.8 billion) sovereign wealth vehicle has committed up to US$175 million to new private equity investments with KKR in North American natural gas.

The fund called the investment terms “flexible,” noting that capital could fund exploration, production, and/or infrastructure at any point in the natural gas development process.  

NZ Super promised another $75 million to KKR’s $2 billion energy income and growth fund. Again, this allocation is set to add exposure to North American natural gas, as well as unconventional oil production.

“Developments in North American gas and oil are profoundly changing both global energy markets and markets within North America,” said Matt Whineray, NZ Super’s general manager of investments. “There is a large and ongoing decline in the burning of coal in the US as energy utilities transition towards gas supplies. Access to these opportunities is, however, difficult to achieve solely through listed markets.”

By investing through KKR, Whineray continued, the fund has could better position itself to the region’s commodities industry. 

NZ Super has recently shown bullishness on more energy sources than just fossil fuels.

On March 12, the fund announced it was doubling its initial $50 million investment in California-based Bloom Energy. The 13-year old firm produces power generation systems using fuel cells for a number of major US corporations, including Google, Wal-Mart, AT&T, and Coca-Cola.

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