KKR to invest in consumer retail, healthcare and tech firms, says Co-CEO

PE firm, which is sitting on a $100 billion cash pile, is also keen to participate in PSU bank privatisation

New York-based private equity firm KKR & Co, which has a $100-billion cash pile, has identified Indian real estate, consumer retail, health care and technology for its next round of investments, its co-chief executive officer Joseph Bae said.
 

The firm, which sold its stake in Max Healthcare for $2 billion, will also look at opportunities in the government’s privatisation drive — especially in banks. It has not participated in the ongoing sale of IDBI Bank.
 

KKR, which has invested $10 billion in India since 2006, is also keen to invest in the roads, highways and infrastructure sector, and operates three large Infrastructure Investment Trusts (InvITs).
 

“India needs a lot of infrastructure. And there was a point in time where private capital stopped coming in. And that's when we launched our business, and we saw a lot of opportunity. It was dealing in buying unfinished projects. in buying platforms, and then developing projects. The country needs infrastructure. It cannot cannot be all debt funded from local banks. It needs foreign capital, and it needs foreign private equity capital. And we have one of the largest infrastructure businesses around the world. We have the largest Asian Infrastructure Fund. And it's a very exciting market. And you combine that with the fact that now, the transparency and the regulations are very clear, It just makes life easy for us to scale up this business," he said.
 

The firm has assets under management (AUM) of $165 billion in private equity and $64 billion of realty assets under management. It also has $54 billion of infrastructure assets under management and $194 billion of AUM in credit business.  He said the Indian commercial real estate sector is one of the most stable sectors along with South Korea. “Significant amount of debt in the realty sector needs to be refinanced, and rising interest rates along with falling prices continue to push up the risks,” he added.
 

Gaurav Trehan, partner and CEO of KKR India, said: “Going forward, KKR would invest in equity in the real estate projects in India.”
 

The firm aims to wind down its real estate financing firm KIAFL as it shifts focus from debt to equity investing.
 

US-based private equity funds have in recent months faced increased withdrawal requests on their real estate investment trusts as the global real estate sector comes under pressure due to fears of a recession and rising interest rates. India, however, remains a sweet spot, Bae said. “Investors are more optimistic than ever in the last 15 years on the India story following a clutch of reforms and improving transparency. While most parts of the world look quite choppy, including the US and Europe, India is in a different spot, and we are building on that opportunity,”  he said.
 

KKR, which is also an investor in Reliance Jio and Reliance Retail, would wait for the investments to mature instead of exiting when the two firms get listed. “We are long-term investors and have no plans to exit,” said Bae, who joined KKR as an analyst in 1996 to become its co-CEO and has been a member of the board of directors since July 2017.
 

Bae said the demographics of India is its biggest strength with more than half of its 1.4 billion population below the age of 30. “While the population in the United States, Europe, China and South Korea is ageing, the challenge for India will be to improve its GDP per capita,” Bae said.

KKR in India

•  35 investments made by KKR in India since 2006

•  20 active portfolio companies incl Reliance Jio, Reliance Retail

*  3 InVITs--Highways Infrastructure Trust, Virescent Renewable Energy Trust, India Grid Trust

*  Among the largest private market investors in India across multiple asset classes

•  Areas active: Private Equity, Infrastructure, Tech Growth, Global Impact, and Credit