Strategic View: KKR structured a €1.2 billion direct lending club to finance its acquisition of Karo 
from EQT in Q2 2025. The transaction, initially expected to pursue broadly syndicated loans, instead utilized a club of private credit lenders following April 2025 market volatility. The deal demonstrates sponsors’ preference for private credit certainty when public markets prove unstable .
Full story: This transaction exemplifies private equity’s tactical pivot toward private credit when syndicated market windows close unexpectedly. KKR agreed to acquire Karo Healthcare, a Swedish specialty pharmaceutical company focused on OTC and prescription drugs across Scandinavia and Europe, from fellow private equity firm EQT. Initial financing plans contemplated a traditional broadly syndicated loan (BSL) structure with bank underwriters syndicating the debt to institutional loan investors .
However, April 2025’s market volatility—triggered by renewed inflation concerns and geopolitical tensions—created uncertainty around successfully syndicating the loan. Banks underwriting BSL deals assume risk that investor demand may prove insufficient, forcing them to retain unwanted positions or price deals at unfavorable terms. Rather than accept this execution risk for a strategic acquisition, KKR pivoted to direct lending, arranging a €1.2 billion club of private credit funds willing to commit fully underwritten, non-syndicated debt .
The club structure likely involved 5-8 large direct lenders each committing €150-250 million tranches. Potential participants include Nordic-focused private credit specialists like Altor Credit or pan-European lenders such as Ares, Apollo, or Sixth Street with healthcare sector expertise. By pre-committing capital without syndication contingencies, these lenders provided KKR with certainty the acquisition could close on schedule regardless of broader market conditions—a critical advantage for competitive auction processes .
Karo Healthcare’s business profile—OTC consumer health products and specialty pharmaceuticals with strong Nordic market positions—offers attractive characteristics for private credit underwriting. The company generates predictable, recurring revenues from essential healthcare products with limited cyclicality. Strong market shares in categories like pain relief, vitamins, and dermatology provide pricing power and defensive positioning. These stable cashflow characteristics support the leveraged capital structure while KKR pursues operational improvements and geographic expansion .
Summary: KKR’s €1.2 billion direct lending club for the Karo Healthcare acquisition demonstrates private equity’s tactical shift from syndicated markets to private credit when volatility threatens execution certainty. The transaction, initially planned as BSL but restructured as a club deal following April 2025 market instability, highlights private credit’s value proposition: committed, non-syndicated capital enabling deal certainty regardless of public market conditions .
