China'S "Buy In Reconstruction" Opportunities: Asia'S Diversified Investment Accelerates

$15 billion! KKR set a new fundraising record.

On April 6, KKR, a global alternative asset investment agency, announced that it had completed the raising of Asia IV fund, becoming the largest private equity fund in the Asia Pacific region.

The fund was raised in 2020, when the total amount of PE / VC funds raised in Asia was cut back. In a challenging environment, KKR not only completed the initial fund-raising target, but also raised more than 20% (i.e. US $2.5 billion) and reached the hard cap.

In accordance with past practice, KKR Asia funds generally invest 1 / 4 to 1 / 3 of the Chinese market. In this way, the fund will add about $4 billion or more dry powder to KKR's investment in China.

On the day of the news disclosure, the 21st century economic reporter interviewed Yang Wenjun and Ji Zhen exclusively. Yang Wenjun is KKR's global partner and President of Greater China, responsible for KKR's overall business in China. Ji Zhen, the managing director of KKR, is one of the main principals of KKR's China private equity business.

"There are very few opportunities to get high-quality projects through intermediaries or phone calls. The opportunities to invest in excellent enterprises are" actively cultivated. " Yang Wenjun said that the maturity of China's PE market has evolved and caught up with the European and American markets, which means that "to invest in high-quality companies, it is not only necessary for us to invest in high-quality companies, we should not only really understand the industry, but also be able to put forward practical development suggestions for entrepreneurs."

Behind the trend of over raising

KKR Asia Fund focuses on private equity investment in Asia Pacific region. To a certain extent, the successful fund raising of the fourth phase of the fund is a booster for fund raising in the Asia Pacific region.

According to the statistics of PreQin, an industry research institution, the number of funds and the total amount of funds raised in 2020 will decrease by 25% and 14% respectively. Focusing on the fund-raising environment in Asia, the total amount of fund-raising focused on Asia has nearly halved from US $154 billion in 2019 to US $81 billion in 2020.

Under the above environment, KKR Asia fund not only achieved the initial fund-raising target of US $12.5 billion in the third quarter of 2020, but also reached the upper limit of fund-raising target in subsequent fund-raising. And as in the past, the fund's fundraising scale increased by more than 50% over the previous period.

For KKR Asia Fund, which is increasing year by year, capital efficiency is a common concern of investors.

"There are some investment opportunities with very large transaction volume in China, and we have the ability to take down projects independently in these transactions." According to Ji Zhen, on the one hand, the total amount of single investment for projects in the Asia Pacific region has increased significantly, and the corresponding fund demand is increasing. On the other hand, a larger fund size will enable the team to be more competitive in striving for high-quality projects.

The reporter of 21st century economic report learned in the interview that KKR's private equity business in China will still be concentrated in the four major fields of consumption upgrading, industrial modernization, medical services and financial technology.

In terms of investment opportunities, KKR Asia IV fund will focus on the opportunities brought by consumption upgrading and urbanization trend, as well as investment opportunities arising from the demand of enterprise business optimization such as asset divestiture, spin off and integration.

In the view of KKR team, companies in Asia Pacific region are beginning to realize that they have the potential not only to become national and regional leaders, but also to further develop into global leaders in their industries. Among them, Chinese enterprises' going out is still a topic worthy of investment. They call such enterprises "China's multinational enterprises".

"We have seen some quality Chinese companies planning to go overseas. The cooperation with Haier four years ago was a very successful case. There are still such enterprises in pipeline today. " Yang Wenjun told reporters that this kind of investment has a large demand for funds, and the volume of the Asia IV fund can better provide financial protection.

"There are some opportunities for M & A in China," he said In addition to common M & A opportunities such as corporate heritage and divestiture of global companies in China, buy and build is becoming an important investment theme for KKR, Ji added.

Asia's diversified investment speeds up

The reporter learned in the interview that the raising of KKR Asia IV fund will not only further consolidate KKR's diversified asset platform, but also provide new growth momentum for KKR's Asia Pacific investment business platform.

The fund-raising performance of KKR Asia Fund IV may be related to two major market trends: on the one hand, it is the concentration of global funds; on the other hand, investors are optimistic about the business potential of the Asia Pacific region.

Specifically, there are huge investment opportunities for private equity in the Asia Pacific region. On the one hand, each market has its unique characteristics. On the other hand, the long-term fundamentals supporting economic growth have regional commonalities. These commonalities include the upgrading of consumer demand, the fast-growing middle class, the acceleration of urbanization, and technological innovation and subversion.

It is worth noting that just three months ago, KKR just disclosed the completion of its first Pan Asia Pacific infrastructure and real estate fund, with the size of $3.9 billion and $1.7 billion, respectively.

In terms of mechanism, KKR's global funds in various asset classes can be used for investment in the Asia Pacific region. The infrastructure funds, real estate funds and private equity funds disclosed in succession have released the signal of speeding up the diversification strategy in the Asia Pacific region.

"The headquarters really told me clearly that we should not only do a good job in China's PE business, but also take into account the new strategy." In the interview, Yang Wenjun also made a clear response to KKR's diversified investment strategy in Asia, especially China.

Yang Wenjun introduced that digital transformation not only brings opportunities for PE investment, but also the opportunities for KKR Asian infrastructure and real estate funds to focus on in the Chinese market are highly related to the theme. In addition, KKR's global impact fund is also looking for investment opportunities related to carbon neutrality in China.

21st century economic reporter learned that since the establishment of the Asia Pacific investment platform in 2005, KKR has more than $30 billion of asset management scale in the Asia Pacific region, including private equity investment, infrastructure, real estate and credit strategies. With the closing of several new funds, KKR now has more assets under management in the Asia Pacific region than it did globally in 2005 (US $23.4 billion).

"Over the past 16 years, we have strategically built an Asia Pacific investment platform and diversified teams. With the continuous growth of the Asia Pacific market, we will usher in a series of the most attractive investment opportunities in the world," said Lu Ming, head of KKR Asia Pacific