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Friday, February 2, 2024

KKR Closes on $6.4B Asia Infrastructure Fund

KKR paid $800 million for a 20% stake in Singtel’s regional data centre business

KKR on Wednesday announced the $6.4 billion final close of its second Asia-dedicated infrastructure fund, with the US buyout giant having already deployed more than half of the vehicle’s committed capital across 10 investments.

The fund, dubbed KKR Asia Pacific Infrastructure Investors II, is the largest-ever pan-regional APAC infrastructure fund to have been raised, overtaking the $3.9 billion closing of KKR’s inaugural Asia Pacific Infrastructure Investors in 2021, the Manhattan-based firm said in a release ↗.

No specific details were provided about the fund’s limited partners. KKR said the fund received strong backing from a diverse group of new and existing global investors, including pension funds, sovereign wealth funds, insurance companies, endowment funds and asset managers.

“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,” said David Luboff, head of Asia Pacific infrastructure and co-head of Asia Pacific at KKR.

Singtel Data Centre Bet

KKR’s Asia Pacific infrastructure platform has grown to $13 billion in assets under management since its 2019 launch, with investments including a 20 percent stake in Singtel’s regional data centre business.

David Luboff, head of Asia Pacific infrastructure at KKR

The firm paid $800 million for its slice of the Temasek-backed data centre operator, retaining the option to increase its stake to 25 percent by 2027 at the pre-agreed valuation. KKR acquired its interest directly from Singtel and received board seats in the regional data centre business, a source told Mingtiandi after the deal was announced last September ↗.

KKR’s other regional infrastructure transactions include a $400 million investment in OMS Group ↗, a Malaysia-based provider of Asia-focused subsea cable services, and the acquisition of more than 5,000 telecom towers in the Philippines through portfolio company Pinnacle.

The latest infrastructure fund was launched in April 2022 and secured a $50 million commitment ↗ from the Employees Retirement System of Texas a month later. The Luxembourg-incorporated vehicle is managed from KKR’s offices at Li Ka-shing’s Cheung Kong Center in Hong Kong’s Central district.

Rising domestic consumption, rapid urbanisation and an emerging middle class are accelerating demand for new infrastructure in the region, said Hardik Shah, a Mumbai-based partner on KKR’s infrastructure team.

“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,” Shah said.

More Deals to Come

Private equity major KKR, better known for its record-setting buyouts of large US companies than for its Asian real estate investments, has upped its presence in regional property markets in recent years.

Nowhere is that clearer than in Japan, where the firm last year teamed with Hong Kong’s Gaw Capital Partners on the $409.3 million acquisition of the Hyatt Regency Tokyo ↗ and made eight rental residential buys for the Tokyo-listed Japan Metropolitan Fund REIT ↗.

KKR hit a $1.7 billion final closing of its first Asia real estate fund ↗ in 2021, exceeding the firm’s $1.5 billion target for the vehicle. Bloomberg reported last October ↗ that KKR was raising a second Asia real estate fund with a target size of up to $2.5 billion, with a goal to finish fundraising by the end of 2024 or early 2025.

Kaylie Pferten
Kaylie Pferten
A pilot of submersible crafts in a former life, now married to my husband David and writing about investment advice.

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