Private equity firm KKR launches largest Asia fund as valuations sink

A record US$6 billion Asia fund announced by US private equity firm KKR yesterday would be deployed at a time when an economic slowdown and emerging market sell-off has knocked the overall value of Asia Pacific corporations to historic lows.

While the market volatility should offer KKR opportunities to buy low, the record of the private equity industry in Asia shows that investing in the region is not as easy as it seems.

Regulatory hurdles, cultural obstacles and wild market swings have forced global buyout firms to swallow smaller investment returns than they hoped, with the exception of a few home run deals.

But KKR, a storied firm that pioneered the leveraged buyout back in 1976, has managed to find success in Asia even after arriving later than rivals.

The firm has invested and exited China Modern Dairy, Singapore tech firm Unisteel, Japanese recruitment firm Intelligence, and remains invested in South Korean beer and baijiu maker Oriental Brewery.

That success has encouraged investors to return to KKR's second Asia-focused fund in droves, despite companies across the region facing a shortage of available money amid concerns of credit tightening.