KKR is looking to deploy bigger pools of capital in Asia in 2019, calling the region its “first priority” for the year, reports PDI‘s sister title, Private Equity International.
The focus is on building the non-private equity businesses – private credit, real estate and infrastructure – in Asia, co-president and co-chief operating officer Scott Nuttall said on the firm’s fourth quarter earnings call on Friday.
“The next step for us is the direct expansion of these non-private equity strategies in Asia, all of which we have launched or plan to launch in 2019… and build them in an integrated way alongside the private equity business,” Nuttall said.
On these strategies, Nuttall added that the firm is seeing opportunities for credit in Australia and South-East Asia, and for real estate in North Asia.
The firm is seeing “continued growth in Asia” for its private equity business, Nuttall said, noting that KKR has been busy in Japan buying non-core subsidiaries and believes “there is more to do” in this area. KKR’s China team is also active as more control-oriented and conglomerate carve-out opportunities arise.
The firm invested more than $800 million in Asia private equity in the last year, roughly 20 percent of the $4.3 billion it invested via the asset class globally in 2018.
KKR is investing its 2017-vintage $9.3 billion Asian Fund III. Among its latest investments are Taiwan’s LCY Chemical, Singapore-based lifestyle and wellness company V3 Group and Filipino technology company Voyager Innovations.
Scaling up real estate in the US, Europe and Asia across debt and equity is the firm’s second priority. It expects to launch fundraising for the strategy across all three geographies, Nuttall said.
The third priority is to invest aggressively in areas of dislocation, which include healthcare and complex conglomerate carve-outs, as well as companies in more defensive sectors.
2019 will be a busy year for the firm on the capital raising front. Its funds in market include its fifth flagship European private equity fund, which is targeting €5 billion; a debut impact fund; an energy fund; and an Asia-focused real estate fund.
KKR’s assets under management reached $194.7 billion as of 31 December 2018 – a 16 percent increase compared with the $168 billion recorded at the same time the previous year. It received management fees of $1.07 billion in 2018, up 18 percent from the $905 billion in 2017.
As of end-December, KKR’s fee-paying AUM stood at $141 billion, up 20 percent on a year-over-year basis. New capital raised in the fourth quarter came to $11.3 billion, making it the strongest period in the year. Dividend flows contributed to $58 billion of dry powder by year-end.
The firm deployed $13 billion across private markets last year – over half that in traditional private equity.
KKR’s private equity funds distributed more than $10 billion to LPs, contributing about $1.2 billion of realised carry for the year.