HONG KONG • Private equity firm KKR & Co said yesterday that it raised US$9.3 billion (S$12.9 billion) for its most recent Asia-focused buyout fund. This was more than expected, setting a record for the region as it seeks larger deals.
Topping its initial target of US$7 billion, the size of its Asian Fund III underscores greater opportunities and appetite for deals in the Asia-Pacific, where private equity firms are increasingly setting their sights on buying control of companies.
"We see a diverse set of opportunities across the Asia-Pacific stemming from rising consumption and urbanisation trends in key markets, as well as larger carve-out and cross-border transactions in countries such as Japan," Mr Ming Lu, head of Asia private equity at KKR, said in a statement.
Asia-focused funds are on a roll this year, with private equity firms raising US$11.7 billion so far with 16 funds, compared with US$13 billion from 15 funds for the whole of last year, said data provider Preqin.
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Volumes are set to grow in coming months as companies, including TPG Capital Management, Bain Capital and Blackstone Group, raise capital for their real estate, credit and buyout funds.
KKR's new fund will add to the pile of cash in buyout firms' coffers, which reached US$136 billion at the end of last year - the third-highest level for unemployed capital, according to Preqin.
The accumulation of capital comes as deal sizes grow.
Although Asian deal activity fell 30 per cent last year to US$54.6 billion and this year has been slow with US$22.6 billion of deals announced so far, the average deal size this year is around US$119 million, near the record set in 2014, according to Thomson Reuters data.
KKR set a previous record for Asia private equity fundraising with its US$6 billion Asian Fund II in 2013, which has been fully deployed and posted a gross internal rate of return of 29.1 per cent to March this year. Returns above 20 per cent are considered good for private equity funds.
KKR said it has invested more than US$12 billion across the region in about 55 companies since it first set up shop in Asia in 2006. It has been particularly busy with large deals in Japan in recent months, announcing a US$2.3 billion acquisition for Hitachi's chip-making equipment and video solution unit in April, and a US$1.3 billion deal for power tools firm Hitachi Koki in January. That followed a US$4.5 billion deal for auto parts supplier Calsonic Kansei Corp late last year.
KKR is also one of the bidders for Toshiba Corp's semiconductor business - a deal that is valued to be at least US$18 billion.