KKR eyes fourth quarter, early 2020 to launch next Asia fund

Kohlberg Kravis Roberts is on a roll when it comes to Asian private equity.

The firm, which closed one of the largest-ever private equity funds raised to focus on Asia in 2017, could launch its next Asia-focused fund as soon as the fourth quarter, a source with knowledge of the firm told Buyouts.

The firm has been talking to LPs about its next Asia fund with investors, the person said. It could launch in the fourth quarter or by early next year, the person said.

KKR Asian Fund VI will target at least as much as the third fund, which closed in 2017 on $9.3 billion, though it’s not clear if a target has been set. At the time, the pool was the largest fund raised for Asia-focused investments until it was eclipsed by Chinese firm Hillhouse Capital, which raised $10.6 billion last year.

Fund IV could be slightly larger than the third fund, the person, an LP who has heard the preliminary fund pitch, said.

KKR’s Asia group is led by Ming Lu, KKR member and head of Asia Pacific, after having joined the firm in 2006. “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,” Lu said in a statement when Fund III closed.

Fund II raised $6 billion in 2013 and its debut 2007 vintage Asia pool closed on $4 billion. KKR’s Asian strategy was formerly led by Joseph Bae, who led the growth of the regional focus starting in 2005, according to his biography. Bae is chairman of KKR’s Asia and Americas Private Equity Investment Committees, as well as co-president and co-chief operating officer of KKR.

KKR Asian Fund III, still in its j-curve period, was producing a 1.06x total value to paid-in multiple as of Sept. 30, 2018, according to performance information from the Florida State Board of Administration.

Fund II was producing a 13.8 percent net internal rate of return and 1.4x multiple as of Sept. 30, 2018, according to performance information from California Public Employees’ Retirement System. The debut fund was generating a 13.7 percent net IRR and a 1.7x multiple as of the same time, CalPERS said.

Firms in the Asia-Pacific region collected $142.6 billion over the five-year period to March 2019, according to PEI research.

Action Item: Check out KKR’s Form ADV here: https://bit.ly/2TYgudK