Global private equity firm KKR has closed its KKR Asia Pacific (Apac) Infrastructure Investors II SCSp fund (the Fund), a $6.4 billion fund focussed on infrastructure-related investments across Asia Pacific (Apac), according to a January 31 media release.
At close, the fund is the largest pan-regional infrastructure fund to have been raised for Apac, according to KKR. The deal follows KKR’s inaugural Apac-dedicated infrastructure fund, KKR Asia Pacific Infrastructure Investors SCSp, which closed at $3.9 billion in 2021.
The Fund will focus on critical infrastructure with "low volatility and strong downside protection" where KKR believes it can add value and achieve attractive risk-adjusted returns, the release said. The Fund has a mandate across sectors including renewables, power and utilities, water and wastewater, digital infrastructure, and transportation, among others, the release said.
FinanceAsia understands that the majority of the fund will be invested in India, Korea, Southeast Asia (SEA) and more mature markets such as Australia and Japan.
Since the new Fund’s launch, KKR has already invested or committed more than half of its capital across around 10 investments. This includes a 20% stake in Singapore telecoms operator Singtel for up to S$1.1 billion ($820 million). Another significant investment has been in India's Serentica Renewables, a decarbonisation platform. While other investments include Pinnacle Towers in the Philippines, which makes towers for telecommunications, and the Highways Infrastructure Trust, a roads infrastructure trust in India.
Showing the appetite for investment in infrastructure in the region, on February 1, India's finance minister Nirmala Sitharam announced an increase of 11% in infrastructure spending in the country's budget for the fiscal year April 1, 2024 to March 31, 2025.
"Key pillar" of regional strategy
“Infrastructure is a key pillar of KKR’s global and regional strategy. We are proud to have built and scaled a market-leading platform in Apac in a short span of time, and are grateful for the continued support by our investors as we close our milestone second pan-regional fund,” said David Luboff, co-head of KKR Apac and head of Apac infrastructure at KKR.
Luboff added: “The success of the fundraise is a testament to the confidence that global investors have in our ability to deliver strong risk-adjusted returns and differentiated value-add through our established multi-asset platform, local presence in key markets, and strong ability to collaborate across multiple strategies and the region. Their commitment underscores our shared conviction that Apac's infrastructure sector holds tremendous potential over the long-term.”
KKR’s Apac infrastructure platform has grown to approximately $13 billion in assets under management since its inception in 2019.
Hardik Shah, a partner on KKR’s infrastructure team, said, “As Asia accounts for more than 60% of global growth, driven by rising domestic consumption and productivity, rapid urbanisation, and an enormous emerging middle class, the need for new infrastructure and sustainable energy sources will continue to accelerate."
Mumbai-based Shah added: "We believe this backdrop presents a significant opportunity for value-added private infrastructure investors, and we welcome the chance to invest behind the development and success of critical infrastructure across Apac.”
The Fund received backing from a group of new and existing prominent global investors, including public and corporate pensions, sovereign wealth funds, insurance companies, endowment funds, and asset managers, the release said.
The latest fund follows KKR’s inaugural Apac-dedicated infrastructure fund, KKR Apac Infrastructure Investors SCSp, which closed at $3.9 billion in 2021.
KKR manages approximately $56 billion in assets under management across more than 80 infrastructure investments, and has a team of more than 90 dedicated infrastructure investment professionals globally.
Debevoise & Plimpton represented KKR as primary fund counsel for this fundraise.
The deal comes after BlackRock's agreement to purchase Global Infrastructure Partners (GIP) for $12 billion. GIP has a significant presence in Apac. The deal is expected to complete in Q3 2024.
