Red Kite Wraps Up Fund Above Target With $1.15B

Hillary Canada, Dow Jones & Company 

The firm held a final close on $1.15 billion for RK Mine Finance Fund II LP, which carried an initial target of $750 million, a person familiar with the fundraising said.

Fund II is a follow up to the 2008 vintage RK Mine Finance Fund I LP, which closed with $420 million. As of December 2011, that fund was generating a gross internal rate of return of 29.4% and a 1.3 times multiple on invested capital, according to a summary presented to Oregon Investment Council.

Red Kite’s strategy is to provide later-state “completion” financing to mines that are within 12 to 36 months of production, as well as royalty streams.

The completion financing Red Kite focuses on includes a structure known as “off-take,” where a mine is obligated to sell a percentage of future production to the lender at set price.

The fund’s position in the capital structure of its portfolio companies offsets the risk of declines in commodity prices, according to the summary presented to OIC, which approved a $75 million commitment to the fund.

Other limited partners that signed on to back the fund include Regents of the University of Michigan and the Washington State Investment Board.

Founded in 2004, Red Kite launched a series of long/short hedge funds prior to raising its first real asset fund.

Ride Kite tapped Eaton Partners LLC to place the fund.

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