According to two people familiar with the situation, KKR & Co. Inc. raised roughly $6 billion for its second Asia-Pacific infrastructure fund at the first close, making it the largest private equity fundraising in the area ever.
The fund received record pledges just seven months after it was established, underscoring investors’ desire to purchase diversified infrastructure assets at a time when rising inflation and interest rates have made it difficult to close deals in many industries.
One of the individuals claimed that the most recent financing came after the American private equity company used the majority of the $3.9 billion raised in its first Asia infrastructure fund, which declared its final close in January 2021.
The first close of a private equity fundraising process is seen as a significant turning point, that shows the fund has attained a minimum threshold and is ready to begin investing.
In order to gain exposure to assets that are thought to generate steady, long-term, and inflation-beating returns, sovereign wealth funds, endowments, insurance companies, pension funds, and family offices throughout the world have been pouring money into infrastructure vehicles.
BlackRock Inc. reported on Tuesday that it had raised $4.5 billion of the $7.5 billion total it sought to raise for a new global fund to invest in assets related to infrastructure for initiatives focusing on climate change.
At the final closure of its third Asia Pacific regional infrastructure fund, Macquarie Asset Management reported in May that it had secured investor commitments totaling more than $4.2 billion, above the fund’s S3 billion target.
HOT DEALS
The latest infrastructure fund from KKR would focus on renewables, telecom towers, power, utilities, and transportation infrastructure, among other things, the sources added. The first infrastructure fund made more than a dozen investments.
In recent years, billions of dollars have flowed into the infrastructure sector, with Southeast Asia in particular serving as a hub for transactions.
Tens of thousands of cellular towers have been purchased in the Philippines by funds backed by companies like KKR, Macquarie, infrastructure firms DigitalBridge, and Stonepeak only this year.
The largest asset management in Malaysia, Permodalan Nasional Bhd, told reporters earlier this month that it will start adding infrastructure assets to its portfolio in 2023.
According to data from analytics company Preqin, KKR’s most recent infrastructure fund would rank as Asia Pacific’s largest-ever dedicated fund for the industry, with investor pledges of $6 billion even at the first close.
According to Preqin data, 19 infrastructure funds with an emphasis on the Asia Pacific raised a combined $10.3 billion last year.
The investment company has launched its regional infrastructure strategy and increased its Asian infrastructure team to 25 people under the leadership of David Luboff, who joined KKR in Singapore in 2019 to lead its Asia Pacific infrastructure business.
Early in 2022, Luboff, who worked for Macquarie Group for 18 years, relocated to Sydney. Later, he was made the co-head of KKR’s Australian and New Zealand business.
The head of KKR’s energy transition unit for Asia-Pacific, Neil Arora, a seasoned infrastructure dealmaker from Macquarie, joined the company last month.
