KKR, Hedge Fund Team Up With Canadian Pension For I-Bank Biz.

Jan 18 2013 | 12:52pm ET

Kohlberg Kravis Roberts and Stone Point Capital have added a new backer to their new middle-market investment-banking business.

The $170 billion Canada Pension Plan Investment Board is now a partner at MerchCap Solutions, which offers both debt and equity underwriting to middle-market and private-equity-backed companies. CPPIB, a longtime KKR investor, is putting up $30 million in capital—KKR and Stone Point each chipped in $150 million—and has agreed to buy up to $2 billion in deals produced by MerchCap.

The pension giant was drawn to MerchCap's focus on "underserved" companies, it said.

"We're trying to take what we do for large-cap clients in the form of private equity, or what big banks do for big companies, and saying to the middle market, you've got these options, too," Craig Farr, head of capital markets at KKR, said. KKR's capital markets business is leading MerchCap initially.


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