KKR considers listing its Indian private debt unit

KKR is considering listing its Indian corporate debt business on a local exchange to seek further growth in the country, a source who is familiar with the matter has confirmed to PDI.

KKR’s private corporate debt business is called KKR India Financial Services Private Limited (KIFS), a Mumbai-based non-banking financial company established in 1995. It is overseen by a chief executive officer, BV Krishnan who is leading KKR’s Indian corporate financing and capital markets activities based in Mumbai.

The discussion is in the ‘conceptual’ stage. “It [taking the NBFC public] is one of the considerations that KKR is thinking about to grow our businesses,” said the source, adding that there are no definitive timelines for such decision yet.

Its business scope is mainly in financing small and mid-sized companies via alternative asset management and capital market solutions. KIFS is registered with the Reserve Bank of India, firm’s public disclosure shows. The firm executed over 110 transactions worth over $5 billion across India as of 31 May.

KIFS is also backed by Abu Dhabi Investment Authority (ADIA). ADIA’s wholly owned entity acquired an undisclosed amount of minority stakes in KIFS according to KKR’s statement on 4 December 2017.

The Abu Dhabi-headquartered sovereign wealth fund has been focusing on its investments in India across various alternative investments, its 2017 annual report shows. For instance, ADIA has disclosed its anchor commitment of $1 billion to the National Investment and Infrastructure Fund (NIIF), a government-backed domestic infrastructure investment fund.

Separately, KIFS has agreed to a partnership with Tranzmute Capital & Management, a Mumbai-based business advisory firm, according to KKR’s statement on 31 May. The advisory firm aims to provide business management, turnaround and restructuring services to investee companies in KIFS’ portfolio.

Both parties disclosed that the partnership will be established in the third quarter of 2018, although a spokesperson from Tranzmute Capital & Management confirmed to PDI that the partnership has not been officially launched yet.

Requests for further comments to Tranzmute Capital & Management and ADIA could not be returned by publication time.

KKR’s credit business expansion plans in Asia was touched on during the latest earnings call held on 26 July.

Speaking about KKR’s approach to building up its private credit business in the current credit cycles, Scott Nuttall, KKR’s co-president and co-chief operating officer, noted during the second-quarter earnings call that KKR is focused on launching a new private credit business in Asia.

“Obviously, Asia is a huge opportunity for us, not only in terms of private credit, where we’re focused on launching a business more formally this year but also across real estate, where we see a big opportunity, infrastructure over time as well,” he said.

PDI understands that KKR also operates the other non-banking financial company, focusing on real estate debt financing activities. It extended over $800 million of financing in Indian real estate developers as of December 2017.

KKR managed a total of $191.2 billion in assets as of 30 June, an increase of $14.8 billion from Q1’s $176.4 billion, according to the second quarter earnings result.