KKR invests $100m in Avantha

The deal marks its third in the Indian conglomerate.

Kohlberg Kravis Roberts has invested about $100 million in Indian conglomerate Avantha Group, a KKR spokeswoman confirmed to Private Equity International.

The investment was made from KKR’s non-banking financial company and not from KKR Asia II, the $6 billion Asia fund it closed last year.

It will be the firm’s third investment in the business, having invested $125 million over two tranches since 2010. AION, a joint venture managed by Apollo Global Management and ICICI Venture, also invested about $153 million in the business in December, local media reported earlier.

KKR now has involvement in the entire business, which touches a number of sectors, including power systems, industrial motors, consumer products and paper, Sanjar Nayar, chief executive of KKR India, said in a statement.

“KKR has been a longstanding partner of the Avantha Group since our investment in Avantha Power in 2010,” he commented.

“KKR, with this creative and flexible financing made through our alternative credit platform, is excited with this enhanced partnership. We hope to jointly drive value-creation in identified segments of the group.”

KKR India Financial Services, the firm’s NBFC in India, was reportedly set up to originate, structure and provide debt financing to entrepreneurs.

Firms like KKR and Apollo have set up vehicles to invest in Indian businesses struggling to pay heavy debt burdens stemming from the boom years. India's slowing GDP growth over the last few years has made the environment more difficult for companies with debt, industry sources say.

The Indian government has also taken steps to rationalise and simplify foreign investment into debt instruments in India providing opportunities for alternative asset managers to access more credit-related investments in the country.

As of 1 April 2013, India has allowed all qualified foreign investors, including private equity firms, to invest up to an overall limit of $51 billion in the form of corporate debt in India – a number that was increased from just $1 billion.

These structures often provide more secure exit routes for private equity firms, too.

While KKR is actively investing from its second Asia fund in other countries in the region, such as a $200 million investment in Malaysia’s Weststar Aviation Services and the $1.6 billion Panasonic Healthcare deal in Japan, both in 2013, the firm is making both equity and debt investments in India.

In November, KKR Asia II invested $200 million in Gland Pharma, an Indian pharmaceutical company, PEI reported earlier. 

The deal came just a month after KKR provided a $90 million convertible loan to Apollo Hospitals, though the loan was not from KKR Asia II.