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KKR set to intensify efforts in Asia with new fund

Kevin Dowd

It's been barely two years since KKR collected $9.3 billion in commitments for its third Asia fund, at the time the largest private equity vehicle ever raised for the region, per the PitchBook Platform. But the buyout giant is already coming back for more.

KKR has begun pitching LPs for a new Asia fund that could formally launch in 4Q or early next year, according to Buyouts, continuing a trend of major PE firms based in the US gathering huge pools of capital to invest in China, Japan and the rest of the region. Two months ago, Warburg Pincus closed a China- and Southeast Asia-focused fund on $4.25 billion, nearly doubling the size of its predecessor. TPG closed its seventh Asia fund on $4.6 billion in February. And in June 2018, The Carlyle Group banked $6.55 billion for its fifth Asia vehicle.

The biggest recent fund in the region, of course, is SoftBank's $100 billion Vision Fund. In terms of more traditional firms, China's Hillhouse Capital closed its fourth flagship fund last September on $10.6 billion, which it's already begun putting to work in private equity and venture capital deals across a variety of sectors.

But among US-based investors, few seem as focused on Asia as KKR. It starts at the top. Earlier this year, co-president and co-COO Scott Nuttall said the region was the firm's "first priority" for 2019; the man who shares both those titles with Nuttall, Joseph Bae, rose to prominence at the firm as "the architect of KKR's Asian expansion," as the KKR website puts it.

The focus on Asia is also reflected in the data. Before 2013, KKR never completed more than eight private investments in the region—spanning PE, VC and growth deals— in any single year, according to the PitchBook Platform. It's now done so in each of the past six full years, climbing all the way to 15 deals in 2017 before a slight dip back to 13 in 2018.

Perhaps the most prominent of those recent moves was KKR's purchase of Japanese auto parts maker Calsonic Kansei from Nissan for a reported $4.5 billion, a takeover that closed in 2017. Earlier this year, KKR used Calsonic Kansei as the platform for a bolt-on of Italy's Magneti Marelli for €5.8 billion (about $6.5 billion), building out the beginnings of an international auto-parts empire.

The other biggest target among KKR's recent investments in Asia is probably Bytedance, a budding Chinese internet conglomerate; you (or your kids) might know it as the parent company of TikTok, the wildly popular video and social media app. Last October, KKR reportedly took part in a $3 billion investment that valued Bytedance at a staggering $75 billion, an example of the firm's growing willingness to pursue deals at earlier stages in addition to buyouts.

Japan and China are probably the most popular markets in Asia for private equity investment, but KKR's portfolio includes some serious geographic diversity: The firm backs companies based in Malaysia, the Philippines, Singapore, Indonesia, Vietnam and more.

And a few months from now, once its new Asia fund is underway, KKR could be pulling in a major new pool of capital to expand its growing network even further.

Featured image via wenmei Zhou/iStock/Getty Images Plus

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