Private Equity Pioneer KKR Raises $9.3B for Third Asian Fund

Leveraged-buyout pioneer KKR has closed on its third pan-Asian fund, after raising US$9.3 billion for private equity investments across the region, the New York-based global investment firm announced Friday. The new vehicle, Asian Fund III, is the largest ever private equity fund dedicated to investment in Asia Pacific, says KKR, citing data provider Preqin.

The closing tops KKR’s initial target of $7 billion for the pan-Asian, multi-sector investment vehicle, as investors increasingly turn to alternative investments such as private equity in search of yield.

Asian Fund III boosts the assets under management of KKR’s private equity business to approximately $68 billion worldwide, and is the largest Asia Pacific-targetted private equity fund ever raised, surpassing KKR’s previous fund of $6 billion.

Following Up on Fund II’s 20.6% Return

With the launch of the new fund, KKR hopes to build on the success of its previous Asia vehicles. According to the firm’s most recent quarterly report, its first Asian fund, commenced in 2007, generated an annualized net rate of return of 13.7 percent. Asian Fund II, commenced in 2013, brought a 20.6 percent net return.

“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,” commented Ming Lu, KKR Member and Head of Asia Private Equity, in the company’s announcement.

Although the company did not specify the types of assets that would be targeted by the fund, KKR’s track record in Asia suggests that property investments could be in the works. Last November, KKR teamed up with Chinese developer Sino-Ocean for a $191 million investment in mainland shopping malls via a stake in retail outlet mall developer and operator Beijing Capital Juda, a subsidiary of Beijing Capital Land.

The launch of the new fund follows a restructuring of the company’s China management team last summer, in which KKR hired Rob Yang from Blackstone to lead its real estate business in Greater China. The company’s China Growth Fund has lagged behind its pan-Asia vehicles, returning 7.8 percent.

KKR Joins Rush to India

In addition to its China retail investment, KKR is also bullish on India, having invested about $9 billion in the country since 2009. In January the company acquired a $46 million residential project in Mumbai, and in March it reportedly committed about $155.2 million for three real estate projects in the country.

KKR was recently edged out by Singapore’s Perennial Real Estate in the bidding for S$1.8 billion ($1.3 billion) Singapore property group United Engineers Ltd this past February.

Since opening its first office in Asia Pacific in 2006, KKR — which under its original name of Kohlberg Kravis Roberts pioneered leveraged buyouts in the US in the 1980s, has grown to be one of the biggest private equity investors in the region. The New York Stock Exchange-listed firm  invested over US$12 billion in Pan-Asia private equity investments in approximately 55 companies across 10 countries.