KKR Asia scores $225m from Oregon

KKR’s second Asian Fund received $225m from the Oregon Investment Council Wednesday. The firm will take minority and controlling stakes in companies based in emerging and developed Asia.

The Oregon Investment Council authorised $225 million in commitments to Kohlberg Kravis Roberts’ second Asian fund at its meeting Wednesday. KKR Asian Fund II is targeting $6 billion for leveraged buyouts and growth equity investments in mid to large market companies.

The OIC committed $200 million to the fund on behalf of the Oregon Public Employees Retirement Fund and $25 million on behalf of the Common School Fund. 

The fund will employ a similar strategy to its predecessor, operating in both emerging and developed Asian markets, according to OIC documents. In emerging Asia, KKR will take minority positions by investing between $100 million and $300 million in companies. The firm’s investments in developed Asia will be larger, between $250 million and $500 million, for either minority or controlling stakes.   

KKR Asia Fund I, which raised $4 billion in 2007, was generating a 14.9 percent net internal rate of return and a total value multiple of 1.38x as of 31 March, according to OIC documents. In addition to KKR’s performance with its first Asia fund, the OIC investment staff’s recommendation was also influenced by the firm’s approach to the region and knack for retaining talent. 

“Staff has been very impressed with KKR’s willingness and ability to be flexible enough to mold their strategies to fit into each country, as well as their ability to build teams with local professionals tied into the local business communities,” according to an investment staff recommendation document. “While the KKR Asia platform is relatively young, and one common theme amongst Asian partnerships is a high level of turnover, the KKR Asia team has been very stable over the past seven years.”

KKR has offices in Hong Kong, Tokyo, Sydney, Beijing, Mumbai and Seoul. The firm tends to organise its team by regional groups, as opposed to industry focus, according to documents. 

In addition to KKR Asian Fund II, the OIC was also scheduled to consider a $75 million commitment to Riverstone Global Energy and Power Fund V. The council decided to table that item for a future meeting, spokesman James Sinks said. 

The Oregon Investment Council manages the investments of State Treasury funds. As of 4 January, the $75 billion system had a 9.3 percent allocation  to private equity, according to data provider Private Equity Connect.