KKR may raise separate Asia fund

With major Asian transactions under its belt and an impressive lineup of talent, New York-based Kohlberg Kravis Roberts is telling limited partners it may raise a separate Asia-focused private equity fund next year.

The firm has told an LP that it may raise as much as $2 billion for the vehicle. A separate LP source confirmed KKR’s hopes to raise an Asia fund, but was told only that the firm would seek at least $1 billion.

KKR is currently in the market with its 2006 Fund, which is targeting well in excess of $10 billion.

Since 1998, KKR has been investing in Europe through a separate European fund. The firm closed its second European fund last year on €4.5 billion.

The head of KKR Asia is Joseph Bae, a 34-year-old member. The firm has also recently made several high-profile hires in the region, including Ming Lu, a former CCMP Capital Asia (JPMorgan Partners) managing director; David Liu, the former co-head of Morgan Stanley’s private equity arm; and Taketo Yamakawa, the former chief executive of GE Consumer Finance in Japan.

Last year the firm brought on board as the chairman of KKR Asia Sir Deryck Maughan, the former vice chairman of Citigroup and chairman and CEO of Citigroup International.

KKR already has significant operations in Asia through its North America- and Europe-based portfolio companies. But the firm has recently announced landmark deals in India and Australia. In April, the firm made a $900 million investment in Flextronic International, a Nasdaq-listed software development business with operations primarily in India. The deal is one of the largest private equity transactions ever in India. KKR partner Adam Clammer led that deal.

Earlier this week, KKR emerged the winner of a battle for Australia’s Brambles Industries, a waste management business. Valued at A$1.6 billion ($1.35 billion), the deal is the largest-ever management buyout in Australia.

KKR’s new $5 billion publicly traded investment vehicle, recently listed on the Euronext Amsterdam exchange, has the ability to commit capital opportunistically to new KKR vehicles. Already KKR Private Equity Investors, the public vehicle’s name, has committed $2 billion to the KKR 2006 Fund, making it the largest LP in the fund and among the largest LP commitments ever made.