KKR Launches $15B Asia Fund Amid $350M Fee Clawback

KKR & Co.

Launches New Asia Private Equity Fund

KKR & Co. has launched a new private equity fund for Asia, aiming to raise $15 billion, which would be one of the largest fundraising efforts in the region to date according to sources. The firm is highlighting recent successes in Japan and India to attract investors. This comes after KKR announced a clawback of $350 million in fees related to a poorly performing older fund as reported.

The fundraising for the fifth Asia private equity fund marks a significant expansion for KKR, as it looks to capitalize on the growing private equity market in the region. The firm is seeking to replicate the success of its previous vehicle, Asia Fund IV, which closed at $12.5 billion in 2021 according to Bloomberg.

KKR is also focusing on private credit in Asia, with a second Asia-focused credit fund aiming for a $2 billion raise and a projected December 2025 close according to Bloomberg. The fund will target performing credit deals with returns in the low-to-mid-teens, reflecting the increasing demand for yield in the region.

Asia's Growing Appeal for Private Credit

KKR is not alone in its pursuit of Asia's private credit market. The region's private credit industry is expected to grow to $92 billion by 2027, up from $59 billion in 2024, driven by strong demand from institutional and wealth investors according to Bloomberg. This growth is fueled by a search for higher yields and diversification in a global market where traditional fixed-income returns have declined.

Despite the potential, private credit in Asia still faces challenges. Traditional lenders like banks remain dominant due to their pricing advantage, offering loans that are often 200–400 basis points cheaper than private debt. Additionally, banks provide a broader range of financial services, including cash management and transaction banking, which private credit firms struggle to match according to Bloomberg.

KKR, which manages $315 billion in credit assets globally, has been building its private credit footprint in Asia. The firm recently hired its first Japan private credit specialist and completed deals in Australia and India according to Bloomberg.

Mixed Performance in Asia

While KKR is optimistic about its latest fundraising, its record in the region is mixed. The firm announced on November 7 that it would refund $350 million in fees from an older buyout vehicle in Asia due to poor performance according to Bloomberg. The fund reported a net internal rate of return of -1.5% as of September 30, although investors are expected to break even according to Bloomberg.

In contrast, KKR's third and fourth Asia funds have performed well, delivering net returns of 19% and 19.2%, respectively, over the same period according to Bloomberg. This disparity underscores the challenges of managing private equity funds in a region marked by economic and geopolitical uncertainties, particularly in China, where KKR has reduced its exposure in recent funds according to Bloomberg.

Japan, however, has emerged as a key market for KKR. The firm has more than $20 billion in assets under management in Japan and has positioned the country as a core growth area according to Bloomberg. The aging population in Japan is seen as a catalyst for opportunities in insurance, credit, and infrastructure, with KKR highlighting these sectors as part of its long-term strategy according to Bloomberg.

KKR's Asian Fund IV, which closed in 2021, was the largest fund of its kind, and the firm has continued to execute high-profile exits, such as the $2.55 billion sale of Japanese supermarket chain Seiyu GK according to Bloomberg.

Strategic Moves and Market Expansion

Beyond private equity and credit, KKR is making strategic moves in other areas of Asia's capital markets. The firm recently provided $750 million in financing to Chandra Asri Group for the acquisition of ExxonMobil's Esso-branded retail fuel stations in Singapore according to Yahoo Finance. This deal is part of KKR's broader effort to support high-quality companies with tailored financing solutions in the region.

The firm is also expanding its exposure to buy-now, pay-later (BNPL) loans in Europe, where it has renewed a partnership with PayPal. The two companies agreed to a deal in which KKR will purchase up to €65 billion ($75.4 billion) of PayPal's European BNPL loans according to Bloomberg. This expansion highlights KKR's growing interest in alternative finance and structured credit products.

As KKR continues to raise capital for its Asia-focused funds, the firm faces both opportunities and challenges. The region's economic landscape remains complex, with geopolitical tensions and shifting market dynamics influencing investor sentiment. However, KKR's deep experience in Asia and its ability to adapt to changing conditions position it to capitalize on the region's long-term growth potential.