KKR is committing at least $750 million to its latest Asia buyout fund, according to a Minnesota State Board of Investment advisory board memo seen by pfm.
MSBI is considering a $150 million commitment to Asia Fund III, which has a target size of $7 billion.
An initial management fee of 1.5 percent of committed capital will be charged during the investment period. This will reduce to 1.25 percent on invested capital after the investment period, and will step down a further 25 basis points every two years, according to the MSBI note. The hurdle rate on the fund is 7 percent.
Asia Fund III’s investment period is a standard six years and terminates 11 years from the initial investment date. There is an option to extend the investment period for up to two 12-month periods, following an LP consultation.
The fund’s predecessor, the $5.8 billion Asia Fund II, was generating a net internal rate of return of 26 percent and a net cash multiple of 1.8x as of September 2016, according to the MSBI document. KKR’s first Asia Fund raised $4 billion and was generating a 14 percent net IRR and 1.4x multiple as of the same date.
The fund will invest in Australia, China, India, Japan, Korea and South-East Asia in businesses in sectors such as food safety, agriculture, healthcare and financial services. It will make a mixture of growth capital investments, corporate divestitures or “carve-outs,” buy-outs and take private transactions.
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