KKR reaches $15b final close on fourth Asian fund

Commitments were received from 290 investors, including 80 that had not previously participated in any of the firm’s Asian PE funds. The vehicle launched in November 2019, so much of the fundraising period has coincided with COVID-19, during which LPs have been unable to travel. Many have been reluctant to venture beyond re-ups or commitments to new managers already under consideration.

KKR Asian Fund IV reached a first close of $10 billion at the end of June. By September, 260 LPs had pledged $13.1 billion, surpassing the $12.5 billion target. LPs participating in the previous vehicle – which closed at $9.3 billion in 2017 – account for 83% of the corpus in US dollar terms. KKR is putting in $1.3 billion, comprising balance sheet and employee contributions.

In addition to reclaiming the title of Asia’s largest private equity fund from Hillhouse Capital, KKR’s latest offering is the second-biggest raised by the firm globally. It is bettered only by KKR 2006 fund, which closed at $17.6 billion in 2008, before the global financial crisis. The firm’s most recent Americas vehicle closed at $13.9 billion in 2017.

The new fund has made five investments to date, of which four have been announced. KKR committed $1.5 billion to Jio Platforms and $755 million to Reliance Retail, both parts of an effort by Reliance Retail to digitalize India’s consumer sector. It also bought a majority stake in Japanese supermarket operator Seiyu at a valuation of $1.6 billion and committed $723 million to Hyundai Global Service, the aftersales arm of Korean shipbuilder Hyundai Heavy Industries Holdings.

The firm describes its PE strategy in the region as pursuing opportunities tied to rising consumption and urbanization trends, as well as corporate carve-outs, spin-offs, and consolidation as companies look to optimize their portfolios. Ashish Shastry, co-head of Asia Pacific private equity at KKR, noted there is cross-border overlay, with companies looking to realize their potential as global leaders as well as national and regional champions.

Hiro Hirano, the other co-head, added in the same statement: “While each market is unique, the long-term fundamentals underpinning the region’s growth are consistent – the demand for consumption upgrades, a fast-growing middle class, rising urbanization, and technological disruption. We are excited by the diverse opportunities we see and are pleased to deepen our commitment to the region with the close of our new fund.”

KKR’s Asia private equity strategy is executed by a team of approximately 70 investment professionals based out of eight offices in the region. They are supported by operational and capital markets experts at KKR Capstone and KKR Capital Markets. The existing PE portfolio comprises positions in about 60 companies across 11 countries.

The firm launched its Asia platform in 2005 and now has more than $30 billion in assets under management in the region. Its latest infrastructure and real estate funds closed earlier this year at $3.9 billion and $1.7 billion, respectively. KKR is also active in the credit space and is currently raising a growth-stage private equity fund focused on technology opportunities.

As of December 2020, Fund III had generated a gross multiple of 1.6x and a net IRR of 30.1%. This compares to 1.5x and 9.5% for Fund II (closed at $6 billion in 2013) and 2.2x and 13.7% for Fund I (closed at $4 billion in 2008).

LPs that have disclosed their participation in Fund IV include Border to Coast Pensions Partnership, Cathay Life Insurance, China Life Insurance, Fubon Life Insurance, Louisiana State Employees’ Retirement System, Minnesota State Board of Investment, New Mexico State Investment Council, New York State Common Retirement Fund, California State Employees’ Retirement System (CalSTRS), California Public Employees’ Retirement System (CalPERS), and Virginia Retirement System.

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