Kohlberg Kravis Roberts has joined an increasing list of Western private equity firms setting up China-focused funds. The firm is currently raising capital for a fund focused solely on Chinese opportunities, four LP sources confirmed to sister news site PEI Asia.
KKR China Fund is targeting “around” $1 billion, a source told PEI Asia. Sources told Bloomberg the fund has a target of $800 million and will make growth capital investments in the country.
A KKR spokesman declined to comment on “market rumours”.
This would be the first time KKR is raising a country-specific fund, having in the past raised regionally and sector-focused vehicles.
KKR is already an active investor in China, making investments in the country from its $4 billion pan-Asian fund that was closed in 2007. That fund makes investments in Greater China, Japan, Australia and India.
The firm completed its first deal in China the same year, when it invested $115 million for a minority stake in Tianrui Cement. KKR’s other deals in China include International Far Eastern Leasing Company, a Chinese financial leasing provider; Ma Anshan Modern Farming, a Chinese dairy farming company.
Over the last 12 months, a number of private equity firms including the likes of the Carlyle Group and The Blackstone Group have either disclosed plans to set up China-focused private equity funds or have done so.
In February, Carlyle signed an agreement with local conglomerate Fosun Group to sponsor and manage a Shanghai-domiciled RMB-denominated private equity fund. A month earlier, it signed a memorandum of understanding with the Beijing Municipal Bureau of Financial Work to set up an RMB fund in Beijing as well. That fund is reportedly targeting commitments of RMB5 billion (€577 million; $738 million).
In August 2009, Blackstone announced it was in a joint venture with the Pudong government to raise up to RMB5 billion for Blackstone (China) Equity Investment Fund, its first RMB fund. Its fund was set up under a pilot policy introduced in June 2009, which allowed foreign private equity and venture capital firms in Shanghai’s Pudong New Area to established wholly-owned Chinese entities.
A few other foreign firms raising RMB-denominated funds include Abax Global Capital, Infinity I-China, Prax Capital, First Eastern Investment Group and CLSA Asia-Pacific Markets.
Siddharth Poddar contributed to this report.