Private equity investment giant KKR & Co. closed a $19.2B fund it plans to invest in data centers, fiber optics and other assets. 

The fund closure occurred in a fundraising environment in which “oftentimes people hear capital allocations are tight, managers are struggling,” Bloomberg reported, citing KKR Global Head of Real Assets Raj Agrawal.

“We have grown our platform, and we believe we’ve continued to take share,” he said.

KKR founded its infrastructure business in 2008 and closed its first fund in 2012. It has grown rapidly in recent years, with KKR’s infrastructure equity increasing from $13B in 2019 to $120B today.

The new fund will focus on investing in three categories: energy power and transition, storage and logistics, and digital assets like data centers and fiber optics. The fund has already committed more than $9B to nine investments, including the acquisitions of The Parking Spot and EDF Power Solutions’ North American operations.

Pension plans, sovereign wealth funds, insurance companies, asset managers, private wealth platforms and family offices supported the fund, according to KKR. The firm leveraged the decline in public markets during the pandemic to get higher returns, which drew investor interest, Agrawal told Bloomberg.

KKR, which in June teamed up with Nvidia and Kuwait’s sovereign wealth fund to launch a new data center developer and operator, sees tangible demand for infrastructure assets to support the growth of hyperscalers and their associated energy needs. 

“We can’t keep up,” Agrawal said. “There’s a ton of opportunity.” 

KKR is being selective about its investment decisions, avoiding assets with contracts that renew in five to seven years and digital infrastructure assets with valuations in the range of 30 times earnings, because they would need substantial growth to avoid losses, Agrawal said.

KKR is more focused on data centers that can serve multiple clients than on customized assets for hyperscalers.