KKR to raise $1.5-2b for maiden Asia-focused infrastructure fund

Highway in Madurai, Tamil Nadu, India. Photo: Ipsita Ray/DEALSTREETASIA

Private equity (PE) firm KKR and Co. is gearing up to raise its maiden Asia-focused infrastructure fund, said two people close to the development, requesting anonymity. The firm, which had recently closed its global infrastructure fund, is targeting to raise between $1.5 billion and $2 billion for the Asia infrastructure fund. “The discussions for launching the Asia infrastructure fund are on and the firm will reach out to investors,” the first person said.

Mint had first reported on 15 October that the investment firm had hired Hardik Shah from Brookfield Asset Management, a leading infrastructure investor in India, to lead its infrastructure investments business in the country.

“KKR hired Hardik (Shah) because it has been planning to launch its infrastructure fund, which will invest across Asia, and India—of course—will be an important geography. Shah will help with the fund raise as well,” the second person said, adding that while the exact amount has not been finalized yet, the PE firm will raise least $1.5 billion.

At Brookfield, Shah was responsible for sourcing and executing infrastructure deals. Earlier, he worked with Macquarie Infrastructure and Real Assets (MIRA), one of the world’s largest infrastructure asset managers.

A KKR spokesperson declined to comment on the development.

KKR and Co. has hired Hardik Shah because it has been planning to launch its infrastructure fund, which will invest across Asia, and India—of course—will be an important geography. Graphic: Mint

“The new fund will focus across various segments within infrastructure right from telecom to roads and energy,” the second person said. It could, however, not be immediately ascertained whether the funds into India will be deployed solely through infrastructure fund or through both the global and Asia funds. The firm usually invests through its Asia funds for other sectors.

So far, KKR has only raised global infrastructure funds and this will be the first time that a separate fund with a geographical focus will be raised for infrastructure investments. In September, KKR had announced that it has raised $7.4 billion for its third global infrastructure fund, focused on investments in OECD (Organisation for Economic and Co-operation and Development) nations. The firm had raised $3.1 billion for its second infrastructure fund.

Within India, KKR has started to test waters in the infrastructure sector.

In August, it had announced the acquisition of a 60% stake in Ramky Enviro Engineers Ltd, an environmental solutions provider, for $530 million. The acquisition is the largest buyout by a PE firm in India’s environmental services sector so far.

As on 30 June, KKR’s total assets under management stood at $191.3 billion.

“The new fund will also have a bias towards control transactions,” the first person said.

According to industry experts, within Asia, India and China are likely to receive majority of the investments. “The risk return profile varies across geographies based on geopolitical scenarios. Due to the high returns potential and moderation in the valuation expectation around infrastructure assets in India, it makes sense for long term investors like KKR to raise a dedicated Asia fund right now,” said Sandeep Upadhyay, managing director, infrastructure, Centrum Capital Ltd.

He added that due to the high returns potential and moderation in the valuation of infrastructure assets in India, it makes sense for KKR to raise a dedicated Asia fund right now.

According to data provided by Preqin, unlisted infrastructure fund-raising is on the verge of a record-breaking year, given that $69 billion has already been raised between Q1 and Q3. In 2017, the sector had raised a record $73 billion.

Swaraj Singh Dhanjal contributed to the story.

This article was first published on livemint.com