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KKR to buy European credit manager Avoca

(Clarifies in 6th paragraph that Dónal Daly will become a KKR senior adviser)

Oct 18 (Reuters) - KKR & Co LP said on Friday it would acquire Avoca Capital, a European credit investment manager with $8 billion in assets, expanding its credit platform as it seeks to fill a void in the sector left by banks.

New York-based KKR said it will have about $28 billion in credit assets globally and $11 billion in European credit assets once the deal closes in the first quarter of 2014. It declined to disclose financial terms.

European banks have faced a severe clamp-down by regulators following the 2008 financial crisis. New lending restrictions such as those in the Basel III framework have curbed their ability to originate and invest in debt, and offered opportunities to alternative asset managers like KKR.

"We believe the European credit space offers significant opportunity. Avoca has a very strong track record, an entrepreneurial management team and excellent capabilities that are complementary to ours in European senior and liquid credit," KKR co-founders and co-Chief Executives Henry Kravis and George Roberts said in a statement.

Based in Dublin and London, Avoca was founded in 2002 by Allied Irish Banks veterans Alan Burke and Dónal Daly and invests in assets such as senior secured loans, structured and illiquid credit, global convertible bonds and long/short credit.

Burke will lead KKR's European credit platform and report to Craig Farr, who heads KKR's global credit and capital markets businesses. Farr became KKR's credit investment chief in July after William Sonneborn left. Daly will become a senior adviser to KKR.

KKR had $83.5 billion of assets under management at the end of June, with the majority in private equity.

Expanding into other alternative asset classes such as credit allows publicly listed companies to offer more products to their fund investors. It also helps smooth out and diversify earnings that are otherwise reliant on the lumpy returns of typically ten-year private equity funds for delivering dividends to public shareholders. (Reporting by Greg Roumeliotis in New York; Editing by Jeffrey Benkoe)