Kohlberg Kravitz & Roberts (KKR) municipal water investment fund is seeking buyers for two concessions it owns with Suez Water in Bayonne, NJ, and Middletown, PA. KKR believes it has derisked the nearly identical contracts over the past four years, and now wants to catch the investor market before interest rates rise further. KKR touted its long-term vision when signing the two water/wastewater deals. It appears to have found a better use for its money.

KKR and its 10% partner Suez Water negotiated a sole source contract with Bayonne late in 2012 and with Middletown two years later. The 11% return on KKR’s $75 million in equity in the two deals is less than the company’s private equity returns.  It’s also less than some other water concessions—Union Labor Life Insurance Co.’s return on the $26 million it and Veolia invested in Rialto, CA is about 18%. But the 11% IRR in Bayonne is set in a well-tested Revenue Path Model deal structure that largely guarantees returns.