KKR deploys USD 11 billion in India; healthcare takes the cake

KKR & Co. says the consumer sector will continue to provide investment opportunities in India, where the US buyout giant is also building out its private credit portfolio.

The investment firm remains bullish on India’s domestic consumption story despite elevated valuations, according to Gaurav Trehan, head of Asia Private Equity and the chief executive officer of the India business.

“It’s probably one of those sectors where valuations sustain and we believe this will continue to be a 15, 20, 25, 30-year story in India,” Trehan said in an interview in Mumbai.

KKR joins a wave of global firms deploying billions of dollars in the world’s most-populous nation, attracted by the fastest-growing major economy and investment incentives offered by Prime Minister Narendra Modi. Blackstone Inc. aims to add an additional $25 billion of Indian private equity assets over the next five years, while Goldman Sachs Group Inc. plans to invest as much as $4 billion over the same period.

KKR has deployed about $11 billion in India over almost two decades, where it has invested in companies across healthcare, life sciences, technology services and consumer-focused sectors. Its co-founder Henry Kravis said earlier this year that the firm will deploy its next $10 billion in the country at a faster clip than before, according to local media reports.

In the consumer segment, the firm has backed eyewear retail chain Lenskart Solutions Pvt and Lighthouse Learning Group, an early childhood and education group. KKR has also taken a stake in Mukesh Ambani’s retail business.

KKR could also look at companies in the manufacturing sector, where it has so far made only one bet on Alliance Tire Group in 2013, Trehan said.

“Something in manufacturing maybe could be an interesting play for us over time given the fact there’s a big impetus from the government to create India as a manufacturing hub,” Trehan said.
Modi’s government has rolled out incentive programs of some 2.7 trillion rupees ($32.3 billion) to encourage domestic manufacturing, offering companies tax breaks and lower land rates. The strategy has had success as companies look for alternatives to China, and firms like Apple Inc. and Samsung Electronics Co. have ramped up production.

Advisers
KKR also plans to add outside executive advisers, starting with its consumer business, Trehan said.

“The advisers will help our CEOs and our management teams execute, provide the strategic vision and help them upgrade,” he said.

It hasn’t always been smooth sailing for the firm in India. KKR got burnt on its local credit portfolio, which lost money and saw a chunk of its capital wiped out in 2019 amid a shadow banking crisis. The unit was later merged with InCred Financial Services Ltd., a local consumer lender.

The firm continues to invest in India through its Asia credit fund, Trehan said. The company raised $1.1 billion for its debut KKR Asia Credit Opportunities Fund in 2022, to offer loans for performing credit in the Asia-Pacific region. The firm expects India to account for 20% of the direct lending market in the region.

“It’s going to be a big opportunity for us going forward,” he said. “We are very focused on it, on scaling that up over the next three to five years.”

Real Estate
KKR, which has a large infrastructure portfolio in India where it invests in roads, highways and renewables, has stayed away from real estate so far. This may change in future.

“I don’t think it’s a sector we don’t want to be in,” Trehan said. “We are just figuring out when is the right time to come in.”

Founded in 1976 by Kravis, Jerome Kohlberg and George Roberts, KKR has moved beyond its private equity roots to becoming an alternative-asset management giant with strategies including buyouts, credit, infrastructure, real estate and insurance.

At its investor day this month, KKR executives said they aimed to have $1 trillion of assets under management in five years, pointing to Asia, infrastructure, retirement and wealth as key growth areas. Bloomberg