When Private Equity International assessed the potential heirs apparent to George Roberts and Henry Kravis's kingdom in 2010, Scott Nuttall was among those we said you should watch. On the sidelines, however, was Joseph Bae.
But as the man who has led the firm to the top of Asian private equity, the 45-year-old former managing partner of KKR Asia will assume joint-control of one of the industry's most revered firms.
The Korean-American dealmaker has been with the firm for over two decades. Only a 30-something associate in KKR's New York office when Kravis and Roberts sent him to Hong Kong to set up its first outpost in the region in 2005, Bae came out to Asia determined KKR could be smarter and better positioned, even after arriving later than its peers TPG and The Carlyle Group.
“He was the leader who started to identify what markets KKR needs to have a presence in – Japan, Greater China, South-East Asia, Korea, India and Australia,” a KKR insider tells PEI. “This is a lot of Bae's own vision, figuring out and understanding where the opportunities are in Asia.”
Under Bae's leadership, the firm has completed more than 60 transactions across the region representing more than $12 billion of private equity investments. Some of the transactions Bae worked on personally include Oriental Brewery, Panasonic Healthcare, Intelligence and Alliance Tire Group.
His first Asian private equity fund in 2007 raised $4 billion from investors and had returned 1.8x net and 13.7 percent net IRR as of 31 March 2017, according to the firm. Its strong performance led to KKR raising a successor fund in 2013 that gathered $6 billion and generated a 1.3x net return and 20.6 percent net IRR.
In June this year the firm amassed $9.3 billion for its third pan-Asia vehicle, the largest in the region's 20-year history. Asian Fund III, which received strong support from its existing investors including Washington State Investment Board and New York State Common Retirement, will focus on cross-border deals, corporate carve-outs and the Asian consumer story.
A Hong Kong-based LP tells PEI KKR has “one of the high-quality teams in this part of the world”.
“With its track record in the region, it has proven it has the ability to generate deals that use a lot of money. They were doubted previously and they proved their doubters wrong,” he adds.
Bae was also instrumental in setting up KKR's “global/local team”, the firm's concept of maintaining highly localised teams that focus on unique origination channels, the insider adds. From its first office in Hong Kong in 2005, Bae has managed a footprint that spans seven offices including Beijing, Tokyo, Seoul, Sydney, Singapore and Mumbai, and covers investments ranging from a motorcycle hailing start-up in Indonesia to a Japanese automotive parts manufacturer.
When asked last year what KKR will focus on for its next decade in Asia, Bae said it was “solutions investing” – or investments in companies with an intentional focus on solving social challenges like food safety and security, environmental innovation, human capital and enhanced access to healthcare.
Bae and Scott Nutall, former head of KKR's global capital and asset management group, are taking the reins of the firm's day-to-day operations from Kravis and Roberts, the firm said on Monday.
Bae has moved back to New York to take on his new role, with the Asia team, led by head of private equity Ming Lu, still reporting to Bae. A spokesperson for the firm noted Bae's previous title of managing partner for Asia will no longer exist.
The New York-based asset manager has named the pair co-presidents and co-chief operating officers. Kravis and Roberts will continue their roles as co-chairmen and co-chief executive officers.
Bae and Nutall will have different areas of responsibility. Bae will focus on private equity along with the firm's real asset strategies, which comprise energy, infrastructure and private equity real estate. Nutall will concentrate on credit, capital markets, hedge funds and fundraising.
In addition to Bae and Nutall's appointments, chief administrative officer Todd Fisher will leave for a career outside of investing and Americas private equity head Alex Navab will retire.
Bae will also become chairman on the Americas Investment Committee, a post which Navab also held, a spokeswoman said in an email.