Global private equity powerhouse KKR and Abu Dhabi sovereign wealth fund Mubadala Investment Company have announced a strategic partnership that will see both firms co-investing across private credit opportunities in the Asia Pacific region.
The partnership aims to deploy at least $1 billion of long-term capital, according to a statement.
Mubadala will deploy its capital alongside KKR’s existing pools of capital, including the recently raised $1.1 billion KKR Asia Credit Opportunities Fund.
This partnership strengthens Mubadala’s exposure in the rapidly growing APAC credit market while enabling KKR to significantly scale its APAC credit platform.
Brian Dillard, partner and head of Asia Pacific credit at KKR, said the firm will have the additional resources to materially increase the size of its investments and pursue more opportunities across Asia thanks to the strategic collaboration with Mubadala.
“The partnership commences at a time when the region’s growth has fueled an enormous demand for funding solutions, as many companies, sponsors, and entrepreneurs face challenges accessing flexible financing due to limited supply of capital from banks and non-bank lenders,” the KKR statement noted.
Meanwhile, Omar Eraiqaat, co-head of credit investments at Mubadala, said that expanding into APAC was a core pillar of the sovereign investor’s strategy, due to the region’s unique credit investment opportunities, driven by its rapid growth and high demand for non-bank capital.
In APAC, KKR has deployed nearly $3 billion in credit capital since 2019, across the environmental services, real estate, education, infrastructure, and healthcare sectors. KKR Credit has made investments in APAC markets such as Australia, Greater China, India, Korea, Malaysia, New Zealand, Singapore, and Vietnam.
Asia’s private credit has witnessed “a sea change” over the past decade, according to investors participating at DealStreetAsia’s Asia PE-VC Summit 2022 recently.
They said Asia has moved away from the previous generation of private bankers hawking unsecured bonds to their high-net-worth clients to a new phase of more rigorous due diligence offered by private credit players.
A spate of global funds is tapping opportunities in the region including BlackRock and Blackstone, which is looking to increase assets in its Asia-Pacific credit business tenfold in the “near term”.
Allianz Global Investors and Apollo are also among the global asset managers that are raising an Asia-Pacific credit strategy.
Closer to home, Malaysia-headquartered Navis Capital Partners has recently launched a new Asia private credit platform.