Joe Bae, co-president and co-chief operating officer of KKR
Global private equity firm KKR is opening an office in Shanghai, marking its third location in Greater China after Beijing and Hong Kong. The new address in the mainland financial hub is aimed at enhancing the company’s focus on the Greater China market, where KRR has deployed over $3 billion since 2007.
To date, KKR has completed 26 investments in China ranging from private equity to real estate through partnerships with leading local firms. The new office is being unveiled as KKR deploys the largest-ever private equity fund dedicated to Asia Pacific, the $9.3 billion Asian Fund III which it closed in May.
KKR Dives Deeper into the China Market
“Our objective is to be the partner of choice to leading companies looking to enter a new phase of growth and expansion,” said Joe Bae, co-president and co-chief operating office of KKR in a statement. “The addition of a Shanghai office – which complements our existing offices in Beijing and Hong Kong – better enables us to fulfill that goal in Greater China and underscores the importance we place on the Chinese market.”
KKR has stepped up the pace of its investments in China’s real estate industry over the past few years, including partnering with China Vanke to invest in Vanke Wuhan Optics Valley, a 2.2 million square foot residential development project in Wuhan in 2014. Last November the company teamed up with developer Sino-Ocean for a $191 million investment in Beijing Capital Juda, a subsidiary of Beijing Capital Land engaged in building and operating retail outlets. The private equity giant hired Rob Yang from Blackstone to head up its Greater China real estate team in June 2016.
KKR commented that it sees further opportunities to partner with Chinese companies targetting expansion through cross-border deals. The New York Stock Exchange-listed firm has previously teamed up with a diverse array of local firms from China Outfitters and Qingdao Haier to COFCO Meats and Rundong Automobile Group.
Global PE Behemoths Target Asia
The new Shanghai office, marking KKR’s 20th office worldwide, should enable the company to better target opportunities in China, which KKR deems a “core focus” within its Asia Pacific strategy.
KKR closed its Asian Fund III, a pan-Asian, multi-sector vehicle, in May amid a wave of private equity fundraising in the region. US private equity giant Blackstone is reportedly planning to raise up to $3 billion for its first buyout fund in Asia, as well as launch an Asia-focused fund of at least $5 billion dedicated to retail and logistics assets in China, India, southeast Asia and Australia.
Private equity heavyweights including TPG Management, Carlyle Group, and Savills Investment Management are also said to be preparing large Asia funds of their own. Hong Kong’s Gaw Capital closed its largest-ever fund this past April at $1.3 billion with a sidecar co-investment of up to US$500 million to focus primarily on property investments in Greater China.
KKR, which pioneered leveraged buyouts in the US in the 1980s under its former moniker of Kohlberg Kravis Roberts, has grown to become one of the most active private equity investors in Asia since opening its first office in the region in 2006. The firm has deployed over $12 billion in pan-Asia PE investments in about 55 companies across 10 countries as of June.
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