<article>Alternative assets management firm <a href="http://www.dealstreetasia.com/?s=kkr">KKR </a>and Co. remains “most excited” about private credit and sees significant opportunity in the US, Europe and Asia in this space, according to its international outlook.</article>

Alternative assets management firm <a href="http://www.dealstreetasia.com/?s=kkr">KKR </a>and Co. remains “most excited” about private credit and sees significant opportunity in the US, Europe and Asia in this space, according to its international outlook.
“As we look ahead towards 2017’s investment opportunities, we are most excited by what we see in private credit. Despite the threat of future regulatory changes, the illiquidity premium still feels appealing, a feature we do not expect to shift in the near to medium term,” KKR’s Outlook for 2017: Paradigm Shift noted.
“Similar to last year, we are still finding a lot of opportunity in the performing side of private credit markets across the US, Europe, and even Asia,” Henry McVey, head of global macro asset allocation at the New York-based company, noted in the report.
In terms of allocation opportunities, while the private equity firm remains quite constructive on the larger deals in private credit, it is also increasingly concerned that the small end of the private credit market is becoming saturated with too many players chasing too few deals with too little differentiation.
McVey also retains his focus on India and China, saying many companies are likely to offload their non-core businesses.
This, KKR feels, could be an emerging opportunity for international private equity companies, particularly across Asia.
One reason for the focus on the private debt business is stable high returns.
In India, KKR India Alternative Credit Opportunities Fund (with a corpus of Rs1,500 crore), the first alternative investment fund, or AIF, raised by KKR India in 2013, has seen an average internal rate of return (IRR) of approximately 18%, Mint had earlier reported.
The buyout firm is upbeat on India and sees big potential in private credit in the region.
KKR has invested close to $3.5 billion through structured financing to about 62 companies in India, including <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=gmr">GMR Holdings Pvt. Ltd,</a> A<a style="color: #000080;" href="http://www.dealstreetasia.com/?s=avantha">vantha Group</a> and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=apollo">Apollo Hospitals Enterprise Ltd.</a>
It is also in the process of raising its second credit fund worth Rs1,500 crore.
On the other side, though it is internationally considered to be one of the top five private equity companies, KKR has also invested about $1.4 billion in India through its private equity vehicle.
KKR is also in the process of setting up an asset reconstruction company, or ARC, to acquire debt-ridden companies and assets.
“As we look ahead into 2017, we think that we are at a major inflection point across the global capital markets&#8230; We view Donald Trump’s ascendancy to the presidency of the US as a confirmation of a political and economic paradigm shift that started with Brexit but is likely to continue for the foreseeable future, including elections across Europe in 2017,” McVey noted.
McVey also cautioned investors to expect to operate in an international macro environment where four potential trends are either reversing or shifting materially, relative to the past.
These trends are—”fiscal stimulus over monetary, domestic agendas over global ones, deregulation over reregulation, and a broadening of outsized volatility from the currency markets to include global interest rate markets”.
The macroeconomic backdrop will likely be shifting from a disinflationary, slower growth environment towards a reflationary one with less onerous near-term banking regulation and fiscal targets, the outlook notes.
Also read:
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<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/china-mengniu-offers-to-buy-out-modern-dairy-for-826k-kkr-cdh-to-get-exits-62062/">KKR, CDH to exit Modern Dairy as China Mengniu offers buy out for $826k</a>
This story was first published on <a style="color: #000080;" href="http://www.livemint.com/Industry/mdTxT1LoXBTC8xJfKnzByO/KKR-and-Co-eyes-private-credit-growth-in-US-Asia-Europe.html">Livemint</a>

KKR and Co. remains “most excited” about private credit and sees significant opportunity in the US, Europe and Asia in this space 

KKR bullish on private credit growth in US, Asia, Europe

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KKR bullish on private credit growth in US, Asia, Europe

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