KKR Credit Income Fund Restarts DRP with Flexible Pricing from July 2025
KKR Credit Income Fund has lifted the suspension of its Distribution Reinvestment Plan, allowing eligible unitholders in Australia and New Zealand to reinvest distributions into additional units starting from the July 2025 distribution.
- Reinstatement of DRP effective from July 2025 distribution
- Eligible unitholders in Australia and New Zealand can reinvest distributions
- Units acquired under DRP free of brokerage and transaction costs
- Pricing based on volume weighted average price relative to net asset value
- Morgans Financial Limited appointed to manage on-market unit purchases
Background and Context
The Trust Company (RE Services) Limited, acting as the responsible entity for the KKR Credit Income Fund, has announced the reinstatement of its Distribution Reinvestment Plan (DRP) after a period of suspension. This move, effective from the July 2025 distribution, offers unitholders a convenient way to reinvest their distributions into additional units of the Fund without incurring brokerage or transaction fees.
How the DRP Works
The DRP is designed for unitholders with registered addresses in Australia or New Zealand, providing them the option to reinvest all or part of their cash distributions to acquire more units in the Fund. The pricing mechanism for units acquired through the DRP depends on the relationship between the volume weighted average price (VWAP) and the net asset value (NAV) on the day the NAV is announced. If the VWAP is lower than the NAV, units will be acquired on-market at the VWAP over a five-day trading period. Conversely, if the VWAP is equal to or higher than the NAV, new units will be issued at the NAV price.
Operational Details and Support
Morgans Financial Limited has been appointed to execute on-market purchases of units on behalf of the Fund’s manager, KKR Australia Investment Management Pty Ltd. Unitholders wishing to participate or modify their participation must lodge an electronic election via the Fund’s online portal. The responsible entity has also updated the DRP booklet, including FAQs and rules, which has been distributed to unitholders to ensure clarity and transparency.
Implications for Unitholders
Participation in the DRP is voluntary and offers a cost-effective way for investors to increase their holdings without incurring additional fees. However, unitholders are advised to seek independent financial, legal, and tax advice before deciding to participate, as the DRP’s impact on individual circumstances can vary. The reinstatement signals the Fund’s commitment to providing flexible investment options and may influence liquidity and capital structure depending on uptake.
Looking Ahead
While the announcement does not specify the exact date of the July distribution or expected participation levels, the market will be watching closely to see how unitholders respond. The Fund’s management will likely monitor DRP election data and market activity to assess the plan’s impact and consider any future modifications.
Bottom Line?
The DRP’s reinstatement offers unitholders a cost-efficient reinvestment option, setting the stage for potential shifts in Fund ownership and liquidity.
Questions in the middle?
- What proportion of unitholders will elect to participate in the reinstated DRP?
- How will the pricing mechanism affect unit issuance versus on-market purchases?
- Could increased DRP participation influence the Fund’s liquidity or market price?
