Kohlberg Kravis Roberts has announced deals in Asia totaling $1 billion, making up almost 50 percent of its active dealflow globally, Scott Nuttall, head of KKR’s global capital and asset management group, said on the firm’s fourth quarter earnings call this week.
“We went to Asia and started to build our business there in '06. So in that period of time, there really was not much of anything in terms of deal opportunity in Asia because we were just starting to build [the] business,” he explained.
“But if you actually look at, as an example, I mentioned [the] $2.5 billion of deals we've announced but not yet closed, over $1 billion of that $2.5 billion is in Asia.”
In closed deals across all asset classes, the firm invested $2 billion of equity in the fourth quarter of 2013, with about 85 percent in private equity in the US and Asia combined.
KKR has been extremely active in Asia since closing its $6 billion Asia Fund II last year. Its deals include the firm’s first in Indonesia and Malaysia, as well as sizeable investments in Japan and India – both in the equity and credit space.
However, the firm continues to use a growth capital strategy in Asia, despite the vast amount of dry powder it has accumulated and the increase in buyout opportunities noted by industry sources from the region.
“In Asia, we're not doing a lot of buyouts. We're doing some, but a significant amount of the opportunity set there is more growth equity. It is providing companies with capital, giving them operational and capital markets expertise. And that's something that we see is [an] interesting way to invest in that part of the world and, frankly, the best way to invest in that part of the world,” Nuttall added.
KKR also had exits last year. On the earnings call, William Janetschek, chief financial officer of KKR Management, said the firm made 5x its money on the sale of Korean beer maker Oriental Brewery.
“We expect to receive proceeds from this sale in the second quarter. [In] 2009, we invested $360 million in OB. And assuming the sale closes, we expect to receive about $1.9 billion or over 5x our money. We expect OB alone will contribute about $0.25 per unit to the second quarter distribution.”