NEW DELHI: American PE fund Kohlberg Kravis Roberts & Co (KKR) has raised $6 billion in its Asian II Fund, the largest pan-Asian PE fund raised so far. A significant portion of the fund could be invested in Indian companies, signalling large PE interest in India despite macroeconomic headwinds, slowing economy and falling rupee.
"We see a lot of attractive business opportunities as economic growth will eventually get restarted, combined with the need for long-term high-quality capital," said Sanjay Nayar, member and chief executive,KKR India. "India offers a whole host of good investment opportunities... some key sectors will witness demand growth. What we need to do as a country is to de-bottleneck the supply side."
KKR had invested over 25% of its first Asian fund in India, picking up stakes in half-a-dozen companies for $1.1 billion. In 2007, it raised a $4-billion regional fund and three years later a $1-billion China Growth Fund. "Asia is a combination of developing Asia, which includes India, China and South-East Asia, and developed Asia, including Japan, Korea and Australia," said Nayar. "We look at country-wise bottom-up opportunities and allocate capital to the best risk-reward situations," he said, when asked how much of the fund could find its way to India.
In 2007, the fund raised a $4-billion regional fund and three years later a $1-billion China Growth Fund. "Asia for us is a combination of developing Asia, which includes India, China and South-East Asia, and developed Asia, including Japan, Korea and Australia," said Nayar.
"I can't guess how much goes where, but we look at country-wise bottom-up opportunities and allocate capital to the best risk-reward situations," the KKR CEO explained, when asked how much of the $6-billion fund could find its way to Indian firms.
The PE fund is looking at investing in non-core carve-outs through corporate divestitures, financial services, infrastructure, healthcare, specialised technology and precision manufacturing. "Reviving industrial growth with a general lack of bank and public market capital will lay the foundation of restructurings and mergers and acquisitions. This will create a significant role for long-term private capital. And such capital will come in either from strategic investors or private equity players," said Nayar.
KKR had invested in business process outsourcing firm Aricent, telecom tower operator Bharti Infratel, Coffee Day Resorts, Dalmia Cement, Magma FinCorp, Avantha Power and TVS Logistics.
In May, the fund purchased a majority control in India's specialised tyre maker, Alliance Tire, for $500 million (around Rs 2,700 crore ). It also owns majority stake in Aricent.
KKR, though bullish on India, is concerned about the volatile capital market. "The biggest hurdle is the poor public market and valuation expectations," Nayar said.