KKR closes inaugural APAC fund on $3.9bn hard-cap

KKR has closed its inaugural Asia-Pacific-focused infrastructure fund on its hard-cap of $3.9 billion within 18 months of its launch.

Asia Pacific Infrastructure Investors, which will invest in both emerging and developed markets in the region, is now the largest pan-regional infrastructure vehicle to have been raised for Asia-Pacific, according to KKR.

The New-York based firm said in a statement that it had invested roughly $300 million of its own capital, alongside the various types of institutional investors that committed to the vehicle. According to a source, Korean investors accounted for $130 million of the total, comprising $70 million from Korean Teachers’ Credit Union and $60 million from Kookmin Bank, Meritz Securities and Orange Life Insurance. KKR declined to comment on individual commitments.

Asked whether the pandemic and the related travel restrictions had impacted fundraising, David Luboff, head of Asia-Pacific infrastructure, said: “It’s been unique in this environment because we were able to get on to a Zoom call and resume our relationship and our discussions.

“In many respects, it has actually been very efficient because we were able to speak with LP partners in the Middle East, Canada and Australia on the same day, as opposed to a more normalised environment when you would never be able to do this due to the travel. The fundraising was certainly enhanced by the experience of our LPs, their understanding of Asia’s infrastructure sector and our long-term trusted relationships.”

The fund has a broad sectoral mandate targeting investments in waste, renewables, power and utilities, telecoms and transport. Asked whether KKR’s view on any of these sub-sectors had changed as a result of covid-19, Luboff acknowledged that “transportation has definitely been disrupted in the short term. Just look at airports, as an example… Other patronage-based assets like toll roads are seeing some traffic rebounds in general.

“My view is that whilst short-term patronage forecasting is very challenging, quality and strategic patronage-based infrastructure assets will perform over the long term. Renewables and digital infrastructure have enormous growth, and I think these sectors will continue to provide great investment opportunities. We do have to be selective though – it’s our job to select the most compelling and strategic opportunities for our investors.”

KKR has already deployed $1.8 billion across six investments through the fund. The firm’s Asia-Pacific infrastructure portfolio includes India’s infrastructure investment trust IndiGrid, Indian renewables company Virescent Infrastructure, Korean environmental services provider Eco Solutions Group, Philippines power producer First Gen, Korean environmental services manager TSK Corporation, and Philippines-based telecoms infrastructure provider Pinnacle Towers.

KKR started expanding its infrastructure team in Asia-Pacific with the appointment of Luboff, previously a senior managing director at Macquarie Infrastructure and Real Assets, in early 2019.