Sat, Jun 03, 2017 - Page 10 News List

KKR raises biggest Asian private fund pool of US$9.3bn

Bloomberg

KKR & Co has raised US$9.3 billion for its third Asia fund, amassing the biggest ever pool by a private equity firm in the region, as the company steps up investments in Japan.

About US$800 million of the pool comes from the firm’s balance sheet and employees, the company said in a statement yesterday.

The fund is 55 percent larger than its second Asia fund, which had generated a net internal rate of return of 20.6 percent as of March 31, the New York-based firm said in the statement.

The pool of money was amassed even as the number of megadeals — transactions larger than US$1 billion — dropped in the region last year and total investment declined by 26 percent, according to Bain & Co data.

Still, one bright spot has been Japan, where more companies are targeting overseas acquisitions and selling non-core assets.

More than half of KKR’s US$4.7 billion in transactions in the region so far this year were in Japan, data compiled by Bloomberg showed.

“We see a diverse set of opportunities across [the] Asia-Pacific [region] 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,” KKR head of Asia private equity Ming Lu (路明) said in the statement.

KKR bought control of Hitachi Kokusai Electric Inc in a US$2.3 billion deal in April, three months after the private equity firm purchased Hitachi Koki Co for US$1.3 billion.

In November last year, the US fund acquired Calsonic Kansei Corp for US$4.5 billion from Nissan Motor Co, as Japan’s second-biggest automaker looks to spin off less important businesses to focus on electric vehicles and self-driving cars.

With the latest fund, KKR’s private equity business has US$68 billion in assets worldwide. KKR raised US$4 billion for its first Pan-Asian fund in 2007 and US$6 billion for a follow-on pool in 2013.

The firm started raising its third fund amid the departures of two of its most senior China executives, David Liu (劉海峰) and Julian Wolhardt, who have been investing in the country for two decades and were behind some of the firm’s most successful investments in the region.

While the Greater China area represents close to half the total Asia-Pacific market, valuations reached record levels last year amid ample capital chasing deals, Bain & Co said.

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