KKR set for $10b first close on flagship Asia fund

The firm launched the vehicle last November with a target of $12.5 billion. If achieved, this would be the largest Asia-focused, US dollar-denominated fundraise, surpassing Hillhouse Capital’s $10.6 billion. The impending first close was first reported by Bloomberg and has since been confirmed to AVCJ by sources familiar with the situation. KKR declined to comment on fundraising.

Fundraising efforts across the region have been thwarted by COVID-19 travel restrictions, with many LPs uncomfortable doing anything more than re-ups based on desktop due diligence and video calls alone. However, industry sources told AVCJ that new investors are coming into the KKR fund without completing on-site due diligence – an exemption generally only extended to brand-name GPs.

LPs that have disclosed their participation in KKR Asian Fund IV include China Life Insurance, Minnesota State Board of Investment, and Cathay Life Insurance, AVCJ Research’s records show.

KKR closed its third pan-regional fund at $9.3 billion in June 2017, upsizing from $6 billion for the previous vintage. Last year, it emerged that the firm also plans to raise a growth-stage technology vehicle focused on Asia. As of March, KKR Asian Fund III had generated a net IRR of 23.7% and a multiple of 1.4x. Fund II was on 9.4% and 1.5x, and Fund I was on 13.7% and 2.2x.

Recent Asia deals include a $650 million investment to Vietnam property developer Vinhomes alongside Temasek Holdings, the acquisition of a majority stake in Commonwealth Bank of Australia’s wealth management arm at a valuation of $2.1 billion, and a $1.5 billion commitment to Jio Platforms, the holding company for various internet and telecom assets owned by India’s Reliance Industries. The latter is KKR’s largest Asia PE deal to date.

The firm also provided an equity cure and secured new bank financing for automotive components supplier Marelli, formed through the merger of Japan’s Calsonic Kansei Corporation with Europe-based Magneti Marelli. The $1.2 billion injection is intended to help the company – which was previously carrying 6x leverage – ride out a market downturn.

There has been a resurgence in Asia private equity fundraising since January, when less than $2.5 billion was committed. It reached $8.4 billion in April and then $8.1 billion in May, each time bettering the total from October 2019. However, the number of closes has remained stubbornly low since the start of the year.

A couple of large pan-regional vehicles – notably those from MBK Partners and CVC Capital Partners – have buoyed the headline fundraising number. Most of the due diligence work on these funds was completed last year.

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• Topics
• Fundraising
• Buyout
• KKR
• Asia