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KKR raises $9.3 billion PE fund to invest in Asia Pacific region

LiveMint logoLiveMint 02-06-2017 Reghu Balakrishnan

Mumbai: Global alternative investment management firm KKR & Co. has raised $9.3 billion for its investments in private equity transactions across the Asia Pacific region, under fund name KKR Asian Fund III, said a company statement on Friday.

The fund surpasses KKR’s $6 billion Asian Fund II to become one of the largest private equity funds dedicated to investing in the region, according to financial data research firm Preqin.

It received backing from a diverse group of new and existing global investors, including public and corporate pensions, sovereign wealth funds, insurance companies, endowments, family offices and high net worth individual investors, said the statement.

Sanjay Nayar, member and chief executive officer of KKR India, said, “India is an integral part of our Asia strategy and this is an exciting time for investment given India’s macroeconomic environment and constructive government initiatives, as well as rising consumption and urbanization trends. The closing of our Asian Fund III furthers KKR’s commitment to India and gives us an even greater opportunity to assist market-leading businesses in their growth.”

With the closing of this fund, KKR’s private equity business manages over $68 billion in assets under management worldwide (using valuations for existing funds as of 31 March 2017).

KKR has been investing in India since 2006 and opened its Mumbai office in 2009. KKR has invested approximately $3.2 billion in Indian companies through its private equity business, and has provided more than $3.5 billion of financing to companies through its corporate- and real estate-focused NBFCs as of 31 March.

KKR’s existing India private equity investments include Aricent, Avendus Capital, Bharti Infratel, Cafe Coffee Day, Emerald Media, Magma Fincorp, Max Financial Services and SBI Life. Over the last 12 months, KKR also announced its exit from portfolio companies, including Alliance Tire Group, Dalmia Bharat Group, Gland Pharma and TVS Logistics.

“We see a diverse set of opportunities across Asia Pacific stemming from rising consumption and urbanization trends in key markets as well as larger carve-out and cross-border transactions in countries such as Japan. We look forward to partnering with companies to provide unique value-add capabilities beyond capital investment alone which generate positive results for our stakeholders,” said Ming Lu, KKR member and head of Asia Private Equity.

KKR’s Asia Pacific private equity platform invests across both traditional control transactions as well as growth equity stakes in companies. Since the firm opened its first office in Asia Pacific in 2006, KKR has invested over $12 billion in Pan-Asia private equity investments in approximately 55 companies across 10 countries.

The predecessor fund of the Asian Fund III, KKR Asian Fund II, began investing in late 2013 and is now fully deployed. It has generated a net IRR of 20.6% and a net multiple of 1.3x as of 31 March 2017, said the statement.

Through debt/structured financing, KKR so far has disbursed more than $3.5 billion to about 70 firms in India, including GMR Holdings Pvt. Ltd, Avantha Group, TVS Logistics, coaching firm Resonance Eduventures Ltd, Radiant Life Care Pvt. Ltd and Apollo Hospitals Enterprise Ltd.

KKR’s lending business in India is operated through various arms—KKR India Financial Services Pvt. Ltd, a non-banking financial company (NBFC); KKR India Alternative Credit Opportunities Fund, the first alternative investment fund (AIF) raised by KKR India; and KKR India Asset Finance Pvt. Ltd, a realty-focused NBFC.

The company is also setting up an asset reconstruction company, or ARC, to acquire debt-ridden companies and assets.

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