UPDATE 1-KKR starts infrastructure group

(Adds background about other infrastructure funds in paragraphs 2-4, fund size from source in paragraph 3, bylines)

By Jessica Hall and Megan Davies

PHILADELPHIA/NEW YORK, May 16 (Reuters) - Kohlberg Kravis Roberts & Co [KKR.UL] said on Friday it would begin investing in global infrastructure assets with a team led by George Bilicic, who joins the private equity firm from Lazard Ltd (LAZ.N: Quote, Profile, Research).

It is the latest money to flow into infrastructure, following Morgan Stanley's (MS.N: Quote, Profile, Research) $4 billion fund raised in May and Global Infrastructure Partners' $5.6 billion fund also raised in May. GIP is a fund set up by General Electric Co (GE.N: Quote, Profile, Research) and Credit Suisse (CSGN.VX: Quote, Profile, Research).

KKR's fund size is yet to be decided but it could pursue about $5 billion, a source familiar with the situation said.

KKR declined to comment on fund-raising.

Despite offering lower growth than traditional private equity deals, infrastructure assets such as utilities, toll roads and airports are attractive to financial bidders like banks and pension funds because of their stable cashflow.

Financial institutions, including banks ranging from Australia's Macquarie (MQG.AX: Quote, Profile, Research) to Goldman Sachs (GS.N: Quote, Profile, Research) and buyout firms like UK-based 3i Group (III.L: Quote, Profile, Research), have all set up infrastructure funds or units as they try to complement other activities with such stable investments.

KKR co-founders Henry Kravis and George Roberts said in a statement that infrastructure was a multitrillion dollar global marketplace with "enormous need for private investment."