KKR launches third Asian fund

The private equity firm closed its previous regional fund at $6 billion in mid-2013. Two investments in Indonesia announced over the summer - agri-food business Japfa Comfeed and ride-hailing and delivery platform Go-Jek - took the vehicle past the 70% commitment threshold at which point initial steps could be taken to raise a new fund.

KKR has seen some team turnover ahead of the fundraise, notably that David Liu, co-head of Asia private equity and head of China, and Julian Wolhardt, regional leader of China, will leave at the end of this year to start their own PE firm. Paul Yang, CEO of China Development Financial Corporation, has been recruited as head of Greater China with Zhen Ji joining from CITIC Capital as a managing director.

Meanwhile, Ashish Shastry, managing partner at Northstar Group, was hired to head up operations in Southeast Asia and Hyoung Seok Lim came in as a managing director based in Korea.

KKR 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. According to the private equity firm's most quarterly filing, the first Asian fund had generated a net IRR of 13.8% and a multiple of 2.2x as of September 2015. The IRR and multiple for Asian Fund II were 26.4% and 1.6x, respectively.

The private equity firm has announced four exits since March, involving India-based Alliance Tire Group, Gland Pharma, and TVS Logistics, and Australia's GenesisCare. All apart from Gland Pharma are Fund I portfolio companies. Last week there was a liquidity event for another investment in the second fund as COFCO Meat went public in Hong Kong.

The largest investment in Fund II is Panasonic Healthcare, which at JPY165 billion ($1.67 billion) represents one of the most significant Japanese corporate carve-outs ever completed by a PE firm. Henry McVey, KKR's head of global macro and asset allocation, thinks this kinds of deal flow could proliferate, driven by conglomerates that have over-diversified across industries or overestimated the opportunity within an industry.

"In our view, complexity of story appears cheap on a relative basis in today's low rate, slower growth environment. Nowhere is this investment set more intriguing right now than in Japan, in our view... Moreover, rates are low, banks need to lend, and many firms require the requisite expertise to help them expand abroad," he said in a recent note.

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