KKR Income Opportunities Fund Announces Results of Special Meeting of Shareholders Relating to Reorganization of Insight Select Income Fund With and Into KKR Income Opportunities Fund

Rhea-AI Summary

KKR Income Opportunities Fund (NYSE: KIO) has announced that shareholders approved the issuance of additional common shares related to the reorganization with Insight Select Income Fund (INSI) at a special meeting held on January 15, 2025. The reorganization involves transferring all assets and certain liabilities of INSI to KIO at net asset value. The transaction is expected to close on February 7, 2025, subject to customary closing conditions.

Positive

• Fund expansion through acquisition of INSI's assets
• Shareholder approval obtained for the reorganization

Negative

• Potential dilution of existing KIO shareholders due to additional share issuance

Insights

Financial Analyst

The merger between KKR Income Opportunities Fund (KIO) and Insight Select Income Fund (INSI) represents a strategic consolidation in the closed-end fund space. This Reorganization, valued at NAV, will expand KIO's asset base and potentially improve operational efficiency through economies of scale. For existing KIO shareholders, the deal could lead to reduced expense ratios as fixed costs are spread across a larger asset base. The transaction structure at NAV ensures fair treatment for shareholders of both funds. However, investors should monitor potential portfolio adjustments post-merger, as the combined fund may need to rebalance holdings to align with KIO's investment strategy. The February 7 target closing date provides a clear timeline for market participants to prepare for potential changes in trading dynamics and fund characteristics.

Market Research Analyst

This shareholder approval marks a significant milestone in the fund consolidation process. The merger could enhance market liquidity for the resulting larger fund, potentially narrowing the discount to NAV that often affects closed-end funds. Trading volumes may see increased activity around the February closing date as arbitrage players and institutional investors adjust positions. For retail investors, the key benefits include potential improvements in secondary market trading efficiency and possibly enhanced dividend sustainability due to the larger asset base. The timing of the reorganization during early 2025 allows for smoother tax planning considerations for shareholders of both funds. The merger's completion will create a more substantial presence in the income-focused closed-end fund segment.

SAN FRANCISCO & NEW YORK--(BUSINESS WIRE)-- KKR Income Opportunities Fund (NYSE: KIO) (the “Fund” or “KIO”) announced today that at the special meeting of shareholders of the Fund (the “Shareholders”) held on January 15, 2025, the Shareholders of the Fund have approved the issuance of additional common shares of beneficial interest of the Fund in connection with the transfer at net asset value of all of the assets and certain liabilities of Insight Select Income Fund (“INSI”) to the Fund (the “Reorganization”).

Subject to the satisfaction of certain customary closing conditions, the Reorganization is expected to close on February 7, 2025, or as soon as practicable thereafter. No assurance can be given as to the exact closing date of the transaction.

Forward Looking Statements

This press release contains certain statements that may include "forward-looking statements" within the meaning of the federal securities laws. All statements, other than statements of historical fact, included herein are "forward-looking statements." The forward-looking statements are based on KIO and KKR's beliefs, assumptions and expectations of future performance, taking into account all information currently available to KIO and KKR. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the KIO or KKR or are within their control. KIO and KKR do not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors which are, in some cases, beyond the Fund’s control and could cause actual results to differ materially from those set forth in the forward-looking statements. This document is not an offer to sell securities and is not soliciting an offer to buy securities in any jurisdiction where the offer or sale is not permitted. Investors should consider KIO’s investment objectives, risks, charges and expenses carefully before investing. An investment in the KIO should not constitute a complete investment program.

KKR Income Opportunities Fund

KKR Income Opportunities Fund is a diversified, closed-end management investment company managed by KKR Credit Advisors (US) LLC (“KKR Credit”), an indirect subsidiary of KKR & Co. Inc. (“KKR”). The Fund’s primary investment objective is to seek a high level of current income with a secondary objective of capital appreciation. The Fund will seek to achieve its investment objective by investing primarily in first- and second-lien secured loans, unsecured loans and high yield corporate debt instruments. It seeks to employ a dynamic strategy of investing in a targeted portfolio of loans and fixed-income instruments of U.S. and non-U.S. issuers and implementing hedging strategies in order to achieve attractive risk-adjusted returns. Please visit www.kkrfunds.com/kio for additional information.

KIO invests in loans and other types of fixed‐income instruments and securities. Such investments may be secured, partially secured or unsecured and may be unrated, and whether or not rated, may have speculative characteristics. The market price of KIO’s investments will change in response to changes in interest rates and other factors. Generally, when interest rates rise, the values of fixed‐income instruments fall, and vice versa.

Use of leverage creates an opportunity for increased income and return for common shareholders of KIO but, at the same time, creates risks, including the likelihood of greater volatility in the NAV and market price of, and distributions on, the common shares of KIO. In particular, leverage may magnify interest rate risk, which is the risk that the prices of portfolio securities will fall (or rise) if market interest rates for those types of securities rise (or fall). As a result, leverage may cause greater changes in KIO’s NAV, which will be borne entirely by KIO’s common shareholders.

Derivative investments have risks, including the imperfect correlation between the value of such instruments and the underlying assets of KIO. The risk of loss from a short sale is unlimited because KIO must purchase the shorted security at a higher price to complete the transaction and there is no upper limit for the security price. The use of options, swaps, and derivatives by KIO has the potential to significantly increase KIO’s volatility. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. KIO’s investments in securities or other instruments of non‐U.S. issuers or borrowers may be traded in undeveloped, inefficient and less liquid markets and may experience greater price volatility and changes in value.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250115374455/en/

Media Contacts

Julia Kosygina

212.750.8300

media@kkr.com

Source: KKR Income Opportunities Fund

FAQ

When will the KKR Income Opportunities Fund (KIO) merger with Insight Select Income Fund close?

The reorganization is expected to close on February 7, 2025, subject to satisfaction of customary closing conditions.

What did KIO shareholders approve at the January 15, 2025 special meeting?

Shareholders approved the issuance of additional common shares of beneficial interest related to the transfer of Insight Select Income Fund's assets and certain liabilities to KIO.

What assets will KIO acquire in the reorganization with INSI?

KIO will acquire all assets and certain liabilities of Insight Select Income Fund (INSI) at net asset value.

How will the reorganization affect existing KIO shareholders?

The reorganization will result in the issuance of additional common shares of beneficial interest in KIO, which could impact existing shareholders' ownership percentage.