Ex-KKR China heads said to raise RM8.3b for new fund

HONG KONG • KKR & Co Inc’s former China heads have raised US$2 billion (RM8.28 billion) for their debut private-equity (PE) fund, according to people familiar with the matter.

DCP Capital has committed 30% of the money for six deals in China, and the firm has also raised US$500 million for a fund denominated in yuan that focuses on domestic Chinese investments, the people said. Investors include GIC Pte Ltd, Temasek Holdings Pte Ltd, New York State Teachers Retirement System Inc, Caisse de Depot et Placement du Quebec (CDPQ) and the Abu Dhabi Investment Authority, said the people, who asked not to be identified because the information isn’t public.

DCP Capital founders David Liu and Julian Wolhardt secured the funding by touting their track record of almost three decades in China. Liu and Wolhardt are part of the first generation of PE investors in the country, arriving in the 1990s. They worked together first at Morgan Stanley before moving to KKR in 2006, leaving a decade later to create DCP Capital.

The pair gained prominence by buying local meat and milk producers hit by the nation’s food-safety scandals, and have developed a niche focusing on traditional sectors in a market that predominantly invests in new-economy firms.

Officials at CDPQ and Temasek declined to comment, while a representative at the Abu Dhabi authority couldn’t immediately provide a comment. New York Teachers and GIC didn’t immediately respond to emails.

DCP Capital is targeting a gross return of about 25% a year, and began raising the money in December 2017, the people said. That’s higher than the average 14% gain for Asia-Pacific- focused funds with a five-year investment horizon, according to a Bain & Co survey published last month.

The size of the debut fund surpasses that of rivals including former Goldman Sachs Group Inc bankers Frank Tang and Fred Hu, according to data from Asian Venture Capital Journal. DCP Capital’s is the biggest first-time, China-focused PE fund by a non-government entity, the data show.

Asia PE funds snapshot: KKR raised US$4 billion in its first fund that focused on Asia in 2006, while RJJ Capital, founded by a former Goldman Sachs partner, hit US$2.3 billion in 2011 in its debut fund devoted to the region. With US$883 billion in total assets under management, Asia Pacific now represents 26% of the global PE market, up from 9% a decade ago, according to data from Bain. Including domestic yuan funds, PE investment value in China rose to US$94 billion in 2018, up 64% over the previous five-year average.

Earlier, KKR and BlackRock agreed in February to invest US$4 billion in Abu Dhabi’s oil pipelines, securing two decades of guaranteed returns and providing the Middle Eastern energy producer with cash to help diversify its economy. — Bloomberg