KKR to bet on Indian consumption story

Rupee fall is a concern, say Sanjay Nayyar

Kohlberg Kravis Roberts & Co (KKR) is looking to tap the Indian consumption story, through multiple deals in areas such as health care, consumer goods and education.

The largest global private equity (PE) funding entity, it raised a $6-billion pan-Asian fund this week and a significant amount will be deployed in India.

According to Sanjay Nayyar, country head for KKR in India, it is set to put a significant amount in the consumer segment here. Though KKR keeps away from deals in core infrastructure and real estate, KKR India has a good deal pipeline in consumer-related areas, according to Nayyar.

Though listed companies in consumer sectors offer decent returns, Nayyar believes there is also much potential elsewhere. "In listed space, investments in India are doing well. However, we have enough opportunities in private space. A lot of fund requirement is among conglomerates and there are enough mid-sized companies which can grow into substantial size," he said.

The fund will have a minimum investment size of $75 million in growth investments in India. However, Nayyar remains concerned over the rupee depreciation. "We have concerns over it.  But our investments are with a long-term view; we are not bothered over its impact on our exits," he added. From its first $4-billion Asia Fund, KKR made a buyout of Alliance Tyres from Warburg Pincus for $600 million. The deal is one of the largest PE transactions in India, after Bain Capital's $1-bn deal to buy stake in Genpact, the business outsourcing company, in August 2012. This was also KKR’s second buyout in India, after it acquired a majority stake in Aricent Inc in 2006 for $900 mn.

Apart from the $4-billion Asia Fund, it owns another $1-billion China Growth Fund, raised in 2010. However, Nayyar ruled out any plans to raise an India-dedicated fund. "The companies in China are much larger than its Indian counterparts. The Asia Fund is large enough for funding Indian companies. We have the flexibility to do both buyout and growth investments in India,” he added.

KKR's largest deals in India include a $250-million investment in Bharti Infratel, $75 mn in Coffee Day, $166 mn in Avnija Properties, a subsidiary of Dalmia Cement (Bharat), and $53 million in Magma Fincorp.