KKR Closes US$6.4 Billion Asia Pacific Infrastructure Investors II Fund

Rhea-AI Summary

KKR closes US$6.4 billion Asia Pacific Infrastructure Fund, largest in the region, with more than half already invested. The fund is focused on infrastructure-related investments across Asia Pacific and has already committed to approximately 10 investments. KKR's Asia Pacific infrastructure platform has grown to approximately US$13 billion in assets under management since its inception in 2019.

Insights

Financial Analyst

The closing of KKR's Asia Pacific Infrastructure Investors II SCSp at US$6.4 billion marks a significant development in the infrastructure investment landscape of the Asia Pacific region. This fund's size, being the largest pan-regional infrastructure fund raised for the area, indicates a robust investor appetite for infrastructure assets in this rapidly growing region. The substantial commitment of capital to infrastructure suggests expectations of stable, long-term returns, often associated with these types of investments. This is particularly relevant given the current global economic volatility, where infrastructure investments can serve as a hedge against inflation and market fluctuations.

Infrastructure assets typically provide essential services that generate consistent revenue streams. This characteristic, combined with the low volatility and strong downside protection mentioned, makes the fund an attractive proposition for investors seeking to diversify their portfolios. The fund's broad investment mandate across sectors such as renewables, digital infrastructure and transportation aligns with global trends towards sustainability and digitalization, potentially offering growth opportunities beyond traditional infrastructure investments.

For stakeholders, including global investors and the communities in which the infrastructure will be developed, the long-term benefits could be substantial. However, the execution of these investments and the realization of expected returns will be contingent on KKR's ability to navigate the complexities of local markets, regulatory environments and geopolitical risks inherent in the Asia Pacific region.

Market Research Analyst

KKR's aggressive growth in the Asia Pacific infrastructure market, with assets under management organically growing to approximately US$13 billion since 2019, reflects a strategic focus on a region experiencing significant economic transformation. The Asia Pacific region's rapid urbanization, emerging middle class and shift towards sustainable energy sources create a fertile environment for infrastructure development. The fund's success in fundraising, despite a challenging macro environment, underscores investor confidence in private infrastructure as a vehicle for tapping into this growth.

From a market research perspective, the fund's deployment strategy will likely have a ripple effect across various sectors. Investments in digital infrastructure, for example, could accelerate technological advancements and connectivity in the region, while investments in renewables may contribute to the Asia Pacific's transition to a low-carbon economy. These developments could, in turn, stimulate further economic growth and create additional investment opportunities.

It's also worth noting the diversity of the investor base, which includes pensions, sovereign wealth funds and insurance companies. This diversity suggests a broad recognition of the potential for infrastructure investments in the region to deliver value across different investment horizons and risk profiles.

Economist

The closing of KKR's new infrastructure fund is a reflection of the economic dynamics within the Asia Pacific region. With Asia accounting for more than 60% of global growth, the demand for infrastructure to support this expansion is significant. The fund's focus on critical infrastructure aligns with the region's economic priorities, such as addressing the needs of a burgeoning urban population and an emerging middle class. These demographic shifts are likely to drive demand for improved transportation, water and wastewater services and energy infrastructure.

Moreover, the fund's investment in sustainable energy sources is particularly pertinent given the global push for environmental sustainability and the Asia Pacific region's role as a significant contributor to greenhouse gas emissions. By channeling capital into renewable energy projects, the fund not only stands to benefit from potential economic returns but also contributes to the region's efforts to meet international climate commitments.

However, the economic impact of such a fund extends beyond the immediate returns on investment. The development of infrastructure can have a multiplicative effect on the economy, creating jobs, enhancing productivity and improving the quality of life. These secondary effects can be substantial and contribute to the broader economic stability and growth of the region.

• Fund is largest pan-regional infrastructure fund to have been raised for Asia Pacific
• More than half of the Fund already invested or committed across ~10 investments

HONG KONG--(BUSINESS WIRE)-- KKR, a leading global investment firm, today announced the final close of KKR Asia Pacific Infrastructure Investors II SCSp (the “Fund”), a US$6.4 billion fund focused on infrastructure-related investments across Asia Pacific.

At close, the Fund is the largest pan-regional infrastructure fund to have been raised for Asia Pacific. This closely follows KKR’s inaugural Asia Pacific-dedicated infrastructure fund, KKR Asia Pacific Infrastructure Investors SCSp, which closed at US$3.9 billion in 2021 as the largest Asia-dedicated pan-regional fund at the time. Since the Fund’s launch, KKR has already invested or committed more than half of its capital across approximately 10 investments. KKR’s Asia Pacific infrastructure platform has organically grown to approximately US$13 billion in assets under management since its inception in 2019.

“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 Asia Pacific 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 Asia Pacific and Head of Asia Pacific Infrastructure at KKR. “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 Asia Pacific’s infrastructure sector holds tremendous potential over the long term.”

KKR’s infrastructure investment approach brings together a disciplined selection process with distinctive investment sourcing and structuring capabilities executed by a dedicated investment team based in markets across Asia Pacific. In line with this approach, 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 by leveraging its global network of industry experts, its highly experienced team in Asia Pacific, and long track record of operational value creation. The Fund has a broad investment mandate across various sectors, including renewables, power and utilities, water and wastewater, digital infrastructure, and transportation, among others.

Hardik Shah, a Partner on KKR’s Infrastructure team based in Mumbai, said, “As Asia accounts for more than 60% of global growth, driven by rising domestic consumption and productivity, rapid urbanization, and an enormous emerging middle class, the need for new infrastructure and sustainable energy sources will continue to accelerate. 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 Asia Pacific.”

Keith Kim, a Partner on KKR’s infrastructure team based in Seoul, said, “Our ability to create investment opportunities and successfully fundraise in a challenging macro environment reflects the strength of our localized teams who have a deep understanding of the markets and business landscapes where we invest, as well as KKR's global expertise and capabilities. We are pleased to significantly deepen our commitment to Asia’s infrastructure sector through the Fund.”

The Fund received strong backing from a diverse group of new and existing prominent global investors across the world, including public and corporate pensions, sovereign wealth funds, insurance companies, endowment funds, and asset managers.

Brandon Donnenfeld, a Managing Director in KKR Global Client Solutions added, “KKR has built a differentiated infrastructure investing approach that combines our decades-long experience of being a value-add investor, having localized teams, and maintaining a focus on downside protection. We are honored to have the continued support from our investors and look to continue delivering strong performance for them.”

KKR first established its global infrastructure team and strategy in 2008 and has since been one of the most active infrastructure investors around the world. Today, the Firm manages approximately US$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 LLP represented KKR as primary fund counsel for this fundraise.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240131782646/en/

Media:

KKR Asia Pacific

Wei Jun Ong

+65 6922 5813

WeiJun.Ong@kkr.com

KKR Americas

Liidia Liuksila or Emily Cummings

+1 212-750-8300

Media@kkr.com

Source: KKR

FAQ

What is the size of the KKR Asia Pacific Infrastructure Investors II SCSp fund?

The fund closed at US$6.4 billion, making it the largest pan-regional infrastructure fund for Asia Pacific.

How much of the fund has already been invested or committed?

More than half of the fund's capital has been invested across approximately 10 investments since its launch.

What is the total assets under management for KKR's Asia Pacific infrastructure platform?

KKR's Asia Pacific infrastructure platform has grown to approximately US$13 billion in assets under management since its inception in 2019.

What sectors does the Fund focus on?

The Fund focuses on critical infrastructure including renewables, power and utilities, water and wastewater, digital infrastructure, and transportation, among others.

Who represented KKR as primary fund counsel for this fundraise?

Debevoise & Plimpton LLP represented KKR as primary fund counsel for this fundraise.