KKR raises $1 billion for China

The news was reported while the US private equity firm held an earnings call detailing the 2010 fiscal year earlier last week. KKR said that economic net income (ENI) reached $2.1 billion for the year - an increase of 9.5% over 2009 - driven by accelerated performance across each of KKR's businesses. It further noted that the continued appreciation of KKR's private equity investments, by 11% for the quarter and 33% for the full year, was the key contributor to the strong results.

In a public statement, Henry R. Kravis and George R. Roberts, Co-Founders, Co-Chairmen and Co-Chief Executive Officers of KKR said, "We raised $5 billion of capital to support our China growth equity, oil & gas, infrastructure, mezzanine, special situations and other strategies. All of this provides us with strong momentum heading into 2011."

During the call, Scott Nuttall, head of KKR's global capital and asset management group said that the firm has seen sovereign wealth funds increase their allocations to alternative investment in Asia, the Middle East and some European countries.

The name KKR has become synonymous with large-sized buyouts, and in response the firm has been exploring other investment strategies and adding special funds, such as mezzanine and infrastructure, as well as its first China-focused fund. As such the group has raised $5 billion in 2010, about 40% of which as come from new limited partners.

In the past, KKR has made investments in Asia through pan-Asian funds. Setting up a regionally focused fund speaks volumes of the firm's long-term commitment to China, sharing a similar view to rival firms such as The Blackstone Group, The Carlyle Group and TPG.

In total, these private equity majors will put $32 billion to work in the next five years in China, where the PE market has a total market cap of only $50 billion. There are also local buyout funds which operate both US and RMB denominated funds unaccounted for in many industry totals. The China boom will make the PE market larger, but the government must ease regulations on large buyout deals in the future in order for the industry to thrive.

A KKR's spokeswoman declined to elaborate on details due to the firm's policy surrounding fundraising.

 

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• Topics
• Greater China
• Fundraising
• KKR