KKR & Co. Inc., a USA-based global investment firm formerly known as Kohlberg Kravis Roberts & Co., announced that it has closed a $3.9 billion fund intended for infrastructure investment in the Asia-Pacific region. This a first investment of its kind from the company and a record size investment for the region.
Referred to as KKR Asia-Pacific Infrastructure Investors, the fund is seen as a nod to the expected boom in public service spending in the region. As COVID-19 vaccines become available, it is expected that governments are moving to accelerate infrastructure spending to stimulate economic recovery amid low interest rates. China, for one, has already allocated $1.4 trillion in investments for digital infrastructure.
KKR Asia-Pacific Infrastructure Investors intends to fund projects in emerging and developed economies particularly in the waste management, power, utility, renewable energy, telecommunication, and transportation sectors.
Ming Lu, Head of Asia Pacific at KKR Asia Limited, noted the possibility that currently available public funds in many countries are running short. “The demand to develop or upgrade critical infrastructure assets outpaces the available public funding in many markets. Private capital is playing an increasingly important role to fill the gap in the region,” he said.
KKR Asia-Pacific was launched in mid-2019. It attracted enthusiasm for being an oversubscribed fund by a variety of investors including sovereign wealth funds, private and public pension funds, insurance companies, private financial platforms, endowments, as well as individual investors. The investors are from different parts of the world including the Middle East, Canada, the United States, and many Asia-Pacific countries.
Interestingly, David Luboff, KKR Partner and Head of Asia-Pacific Infrastructure, has noted that fundraising for KKR Asia-Pacific had been “very efficient during the pandemic.”
“Normally, there are so many lost hours in terms of flying and going through airports, with the team away from actual deal-making. But this time we benefited because we could jump on a Zoom call with people who were already known to us,” Luboff said.
KKR & Co. Inc. made a $300 million investment in the KKR Asia-Pacific Infrastructure fund. The company is confident as it bets on the post-COVID recovery of the Asia-Pacific region and with its global infrastructure team and strategy put in place since 2008. The company maintains a roster of 45 investment professionals. In more than a decade, the company had already deployed over $24 billion worldwide in around 40 investments.
KKR’s Asia-Pacific infrastructure portfolio is quite diverse. It includes the Indian renewable energy company Virescent Infrastructure, the renowned Indian infrastructure investment trust India Grid Trust, the South Korean environmental services companies Eco Solutions Group and TSK Corporation, Filipino clean energy venture First Gen, as well as the Philippine-based telecommunications infrastructure firm Pinnacle Towers.
Reportedly, KKR is eyeing major investment opportunities in Japan and South Korea as well as in the emerging economies of the Philippines and India. In the immediate future, KKR Asia-Pacific Infrastructure Investors will be funding a total of 15 investments. The fund’s management, however, has not disclosed a detailed timeline of the expected investments and the companies it will be backing financially.
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