KKR seeks up to $7b for third Asian fund

The vehicle is expected to launch towards the end of 2016, according to a source familiar with the situation. This comes as KKR's two recent investments in Indonesia - agri-food business Japfa Comfeed and ride-hailing and delivery platform Go-Jek, the latter of which is expected to close imminently - took Fund II past the 70% commitment threshold. It is too early in the process for a hard cap to be set for Fund III.

The firm established a presence in Asia in 2005 and raised $4 billion for its debut pan-regional fund two years later. A $1 billion China growth fund followed in 2010. The second Asia fund remains the largest pool of private equity capital ever raised for the region, although other GPs have seen fund sizes increase: RRJ Capital, for example, now occupies second spot, having closed its third fund, which invests globally but has an emphasis on China and Southeast Asia, at $4.5 billion last year.

According to data released by the California Public Employees' Retirement System (CalPERS), KKR Asian Fund I had delivered a net IRR of 13.3% and a multiple of 1.6x as of December 2015. The IRR and multiple for Fund II were 26.4% and 1.3x, respectively. The performance of Fund I compares favorably to that of similar vintage Asia funds raised by TPG Capital and The Carlyle Group, and is more or less on a par with Affinity Equity Partners' third vehicle, which also closed in 2007.

Over the past six months KKR has announced exits from three companies: in March it agreed to sell India-based Alliance Tire Group to Yokohama Rubber for $1.2 billion; in July China Resources Group confirmed it would buy a majority stake in Australia's GenesisCare at an enterprise valuation of $1.3 billion, which includes the purchase of KKR's 45% interest; and, also in July, KKR said it would exit its 38.4% stake in India's Gland Pharma as part of Shanghai Fosun Pharmaceutical's acquisition of a controlling interest in the business for $1.26 billion.

Alliance Tire and GenesisCare are both Fund I portfolio companies, while Gland Pharma is in the second Asia fund. The biggest exit from Fund I in dollar terms is likely Oriental Brewery, which KKR and Affinity sold to Anheuser-Busch InBev for $5.8 billion in 2014, securing a 5x return.

The Japfa investment - KKR's first PE deal in Indonesia - was disclosed in June, with the firm acquiring a 10.4% stake in the business for $81.2 million. The Go-Jek deal was announced early this month as KKR, Warburg Pincus, Farallon Capital and Capital Group Private Markets agreed to lead a $550 million round.

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• Topics
• Buyout
• Fundraising
• GPs
• KKR
• Asia