FAQs

The information set out in these FAQs is intended to be a summary only and should be read in conjunction with the more detailed information in the PDS.  In deciding whether to apply for Units under the Offer, you should read the PDS carefully and in its entirety. If you are in doubt as to the course you should follow, please consult your professional adviser.

About the Trust

What are the Trust’s investment objectives?

The Trust’s primary investment objective is to provide Unitholders with access to KKR’s global credit investments through the KKR Managed Funds, which seek to take advantage of the attractive opportunities that KKR sees in the market. The Trust’s investment objective is to provide Unitholders with an income stream as well as to achieve attractive long-term capital appreciation over a full market cycle by providing investors with exposure to underlying credit investments that are diversified (by number of investments and across geographies and asset classes). These investments will typically have a high-income component.  The Trust will seek to achieve this objective by investing directly or indirectly in the KKR Managed Funds.

There is no guarantee that the Trust will achieve its investment objective.

How are the Trust’s investments structured?

To achieve the Investment Strategy and target portfolio construction, the Manager intends to initially invest in the following:

  • the Global Credit Opportunities Fund; and
  • the European Direct Lending Fund (together the KKR Managed Funds).

The Trust will gain its exposure to the Global Credit Opportunities Fund by investing in a Profit Participating Note issued by the Global Credit Opportunities Feeder Fund, which will, in turn, invest in the Global Credit Opportunities Fund. The Trust will indirectly receive distributions from the Global Credit Opportunities Fund through its interest in the Profit Participating Note. The available proceeds of the Global Credit Opportunities Feeder Fund will be paid as interest on the Profit Participating Note. 

The Trust will gain its exposure to the European Direct Lending Fund by directly investing in the European Direct Lending Fund.

What is the percentage allocation of these strategies for the Trust?

The Manager intends to fully deploy the Offer Proceeds into the Global Credit Opportunities Fund. The Manager also expects the Trust to redeploy up to 50% of the Offer Proceeds into the European Direct Lending Fund over time.

What is the track record of the Trust?

Although the Trust’s Investment Committee has extensive experience analysing, investing in and managing the types of investments which reflect the Trust’s Investment Strategy, the Trust is a newly formed entity with no financial, operating or performance history upon which to evaluate its likely performance. The Trust will aim to provide Unitholders with attractive, risk-adjusted returns through a diversified portfolio of income-generating alternative credit investments managed by KKR’s credit investment teams.

KKR Credit Advisors (US) LLC (the Investment Adviser or KKR Credit) has a team of approximately 120 dedicated credit investment professionals across 9 cities in 8 countries, including Australia. The team brings decades of proven financial and operational experience, broad regional and industry expertise, deep understanding of global macroeconomic and geopolitical trends, and a powerful network of global relationships.

What is the Trust distribution Policy?

It is the Responsible Entity’s intention to pay quarterly distributions and to distribute 100% of the distributable income of the Trust on an annual basis.

Will the Trust use hedging or Derivatives?

Yes. The Manager intends to hedge currency risk back to the base currency of the Trust, which is the Australian Dollar.

How long will it take to invest the portfolio?

The Manager intends to fully deploy the Offer Proceeds into the Global Credit Opportunities Fund and subsequently redeploy up to 50% of the Offer Proceeds into the European Direct Lending Fund over time. The Manager estimates that it will take approximately 2 to 3 years to deploy approximately 40% to 50% of the Trust’s assets to the European Direct Lending Fund.

Will the Trust be leveraged?

While the Trust will not use leverage as part of its investment approach or investment strategy, the Trust does intend to borrow to manage its liquidity, including for short term financing to enable the Trust to undertake its investment activities and to meet the short term working capital requirements of the Trust.  It is expected that this liquidity facility will be no more than 30% of the overall size of the NAV of the Trust when the facility is entered into. The purpose of this facility is to allow the Trust to invest in European Direct Lending deals while awaiting redemptions from the Global Credit Opportunities Fund as the Trust allocates capital across these two strategies.

The Trust may also borrow for the purposes of satisfying margining requirements in connection with its use of derivatives for foreign exchange hedging purposes (by using a liquidity facility to fund any hedging costs). 

The assets of the Trust may be used as collateral for such borrowings.

The KKR Managed Funds which the Trust is expected to invest in may also borrow on a temporary basis for cash management purposes.

Investors should consider the risks relating to the use of leverage described in Section 8.26 of the PDS.

Will there be a Dividend Reinvestment Plan?

Yes. The Responsible Entity intends to establish a DRP.

 

Fee Structure

What Fees will the Manager receive?

Under the Investment Management Agreement, the Manager will be entitled to:

  1. a Management Base Fee of 0.88% per annum of the NAV of the Trust plus the net amount of GST of 0.022% (i.e. 0.902%, inclusive of GST), calculated and accrued monthly, and payable monthly in arrears out of the assets of the Trust; and ; and
  2. a Management Performance Fee of up to 5.125% (inclusive of GST, less RITC) of net annualised return for a “Performance Period” multiplied by when certain conditions, including a performance hurdle, described in section 9.4.1.4 of the PDS are satisfied.

 

Marketing

Is there an ongoing communication plan?

Yes. The Responsible Entity will release to the ASX and post to the Trust’s website a monthly statement of the net tangible asset (NTA) backing of its Units. The Responsible Entity may in the future elect to publish the net tangible asset backing of Units on a more frequent basis.

The Trust will also report in accordance with the Corporations Act and Listing Rules including under the continuous disclosure regime. The Responsible Entity intends to provide regular, accurate and timely disclosures to the market through releases to the ASX and posting of such material to the Trust’s website.

How does the fund value its NTA?

The Trust’s NTA backing will be calculated and made available monthly on the Trust’s website and on the ASX.  JPMorgan will also calculate this although it is not expected to differ from NAV per Unit.

The value of the Trust’s investment in each KKR Managed Fund will be calculated by the KKR manager managing the relevant KKR Managed Fund. The managers of the KKR Funds intend to engage an independent administrator for each of the KKR funds Managed Funds to provide independent valuation and other administrative services to assist the manager of that fund with the related administrative burden and to conform to market practice for funds of that type.

The NAV of the Global Credit Opportunities Fund is issued approximately 20 business days after month-end. The NAV of the European Direct Lending Fund is issued 3-4 weeks after quarter-end, with KKR’s financial earnings.  In some cases, the annual earnings may not be released until 5-6 weeks after quarter-end.

As a result of the difference in the frequency of the valuation of the Trust and the KKR Managed Funds and the timing of the release of valuations by the KKR Managed Funds, the NAV of the Trust will likely reflect the previous month-end or quarter-end.

 

About the Manager

Who is the Manager?

KKR Australia Investment Management Pty Ltd is the manager of the Trust. It is a proprietary limited company incorporated in Australia and, is an affiliate of Kohlberg Kravis Roberts & Co. L.P. (KKR), and KKR Credit.

KKR is a leading global alternative investment firm with approximately $206 billion in assets under management. KKR employs over 430 investment professionals globally, including approximately 120 investment professionals within the KKR Credit business.

KKR has over four decades of experience in investments, and a strong record of investment performance over the global economic cycles during that time.