KKR eyes Asia real estate market with US$1.5b investment fund

Hong Kong

GLOBAL investment powerhouse KKR & Co Inc is raising its first Asia-focused real estate fund, targeting US$1.5 billion as it looks to deepen its real estate portfolio in the region, said people with knowledge of the matter.

The New York-headquartered private equity firm is moving towards first-close of the fund late in the second quarter, the people said, declining to be named as the information is confidential.

The firm itself will commit about US$250 million in capital, and potential investors - also known as limited partners - include sovereign funds and pension funds, they said.

KKR declined to comment.

The fundraising comes as private equity firms globally have expanded from a model of buying out companies to turn around and sell for profit. They now invest through a range of alternative asset management products, including infrastructure, real estate, hedge funds and credit.

Investment firms raised US$18.6 billion in 26 Asia-focused real estate funds last year, the highest since 2008, according to data provider Preqin. KKR's US-based rival Blackstone Group raised the region's biggest real estate fund last year at US$7.1 billion.

Like its peers, KKR has been building out new capabilities outside traditional private equity investments in Asia. It has committed about US$2 billion in equity and debt across nearly 50 real estate transactions in the region, including South Korea, Australia, China and India since 2011, the firm has said.

Late last year, it teamed up with two Korean partners to acquire a mixed-use real estate project under development in Seoul's Gangnam business district for about US$1.9 billion.

It also invested in The-K Twin Towers, a commercial property in Seoul in 2014 with a Hong Kong-based hedge fund in a deal which South Korean media valued at 500 billion won (S$658 million). The property was sold to Samsung SRA at a premium last year.

The firm has also been an active financing provider in India through its real estate-focused non-bank finance firm KKR India Asset Finance Ltd.

KKR has a team of about 20 real estate professionals based in Asia-Pacific spanning both the equity and credit deals.

Last May, it hired John Pattar, former chief executive of CLSA Real Estate, to head its Asia real estate team. Mr Pattar ran CLSA's real estate funds for almost 15 years before joining KKR.

It has also hired new heads of infrastructure and credit for Asia and is separately considering launching an Asia-focused infrastructure fund, Reuters has reported.

Earlier this month, KKR announced the hiring of Kate Richdale, former Asia investment banking chief at Goldman Sachs, in a newly created role as Asia-Pacific head of strategy and business development. REUTERS