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After Gojek, KKR looks to add to its big Asian successes

Speculation rife that private equity player will launch fourth Asia-focused fund

It is not well-remembered that Gojek was able to catapult into the rarefied club of decacorns thanks to a financial boost from KKR. (Photo by Akira Kodaka)

BANGKOK -- U.S. private equity firm Kohlberg Kravis Roberts is poised to go on an aggressive buyout offensive in a part of the world it forecasts will avoid the storm clouds being cast by the U.S.-China and U.K.-EU rifts.

There is speculation that KKR will launch its fourth Asia-focused fund next year, after having recently named Hirofumi Hirano, CEO of its Japanese subsidiary, and Ashish Shastry, representative of its Southeast Asian operations, as co-heads of the investment house's Asia-Pacific private equity business.

KKR's previous three Asia funds came to about $20 billion. The first was set up in 2007, followed by the second in 2013 and the third in 2017. 

The big private equity player has been pulling off deals in the Asia-Pacific region that make it easier for big corporations to restructure across borders. In August, it acquired the Asia-Pacific snack business of U.S.-based Campbell Soup. It spent $2.2 billion on the deal, which brought Australia's beloved Tim Tam biscuit brand into its portfolio.

KKR has aggressively invested in information technology and a range of other industries across the Asia-Pacific region, focusing on companies that have graduated from early development and entered a growth stage.

"Asia," Shastry said, "continues to be a bright spot." The executive's comment shows confidence that the region can escape the uncertainty that is dampening much of the rest of the global economy and maintain its high growth. The global anxiety is being fed by the U.S.-China trade fight, the U.K.'s planned exit from the European Union and other stress points.

Asia's growth is coming from an army of technologically savvy startups like Gojek, the Indonesian ride-hailing decacorn.

A decacorn is an unlisted company whose corporate value surpasses $10 billion. They are a rare beast; only about 20 exist.

Gojek's success story is well-known. Founded by Nadiem Makarim in 2010, the company began distributing its ride-hailing app in 2015 and has since grown into a daily services provider that helps users get to where they are going, have meals delivered to where they are, make payments and tend to an array of other errands.

What is not well-remembered is that KKR played a role in supporting Gojek's leap into the rarefied club of decacorns.

In August 2016, KKR U.S. fund Warburg Pincus and other investors agreed to put a total of $550 million into Gojek. At the time, Nadiem said, "We are extremely humbled and excited to work with such world-class partners."

As Nadiem's remarks suggest, the investment from a long-established investment fund held much significance.

Not only did KKR provide Gojek with funds the startup needed to expand, it also drew global attention to Southeast Asia's ride-hailing market and encouraged others to invest in the Indonesian venture.

In 2018, other big investors, like U.S. search and advertising giant Alphabet, followed KKR's lead and began investing in Gojek.

During the same year, KKR partnered with China's Tencent to invest in Philippine electronic payment company Voyager Innovations.

In another 2018 investment, KKR put a relatively small amount of money in ByteDance, the Chinese video-sharing site operator and TikTok parent that was once said to have a valuation of $73.6 billion.

Also in 2018, KKR invested 200 million Singaporean dollars in Singaporean online property transaction company PropertyGuru.

Leveraging that investment, PropertyGuru since the beginning of this year has been on a Vietnam expansion blitz.

Vietnam's economy is booming as companies relocate production there from China to avoid U.S. tariffs.

There is speculation in Asia's financial centers that PropertyGuru in 2020 will go on an aggressive merger and acquisition spree throughout Southeast Asia by targeting providers of property information analysis and online housing loans.

KKR invested in PropertyGuru through the $9.3 billion Asia fund it set up in 2017.

Sources involved with the fund in Hong Kong and Singapore think preparations for KKR Asian Fund IV might begin as early as next year; KKR has not commented on the speculation.

KKR is also pursuing a "growth investing" strategy -- putting money into growing companies -- through Emerald Media, based in Mumbai, India.

In 2017, KKR-backed Emerald Media led a $65 million funding round for Thailand's aCommerce. The company, which helps to bring brands and retailers online in Southeast Asia, had been founded four years earlier.

This kind of "growth capital" investing is aimed at supporting startups that have entered a full-scale business expansion phase. It also symbolizes KKR's investment philosophy -- bet big on Asian growth.

But big bets on startups have come under scrutiny since WeWork earlier this year cost benefactor SoftBank billions of dollars. Now KKR, which has enjoyed years of smooth investment expansion, will be put to the test.

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