This content is from: Corner Office

New York State Common Retirement Fund Commits to KKR’s Asian Fund

The pension plan has committed $275 million to KKR Asian Fund III, and may increase its allocation to as much as $300 million.

  • Alicia McElhaney

The New York State Common Retirement Fund is turning to KKR & Co. for private-equity returns in Asia, the latest state pension fund to reveal its bet that the buyout firm will be successful in the region.

The Albany, New York-based pension plan disclosed Thursday in its latest monthly transaction report that it committed $275 million to KKR’s third Asian private equity fund, possibly increasing its allocation to as much as $300 million, according to the document detailing transactions done in March. KKR's earnings report Thursday shows that it has raised about $5.8 billion for the new fund, which will invest in takeovers and minority-stake deals in the region over the next six years.

The New York State Common Retirement Fund has joined the Ohio Police & Fire Pension Fund and Washington State Investment Board this year in disclosing contributions to KKR Asian Fund III. State pensions continue to show interest in private-equity deals in the region even as U.S. private-equity funds focused on Asia are generally attracting less capital than in 2014, when a peak $13 billion was raised, according to financial data firm Preqin.

The Ohio Police & Fire Pension Fund disclosed in February that it approved a $30 million commitment to the fund, while the Washington State Investment Board agreed in January to a $500 million commitment.

Despite KKR’s success attracting billions for its third Asian fund, at least one pension fund that weighed participating in KKR Asian Fund III decided not proceed with a contribution.

The New York State Teachers’ Retirement System, which said in January that it was considering a $200 million commitment to the fund, ultimately decided to not go forward with the allocation, a spokesman said by phone Thursday. He declined to say why the pension plan isn’t participating.

Private-equity fundraising focused on southeast Asia is “challenging” as fund investors shift their focus to venture capital investing in the region, according to a Preqin report Thursday. “No buyout funds closed in 2016, the first time this has happened in seven years,” the firm said. “Furthermore, none of the [southeast Asian]-focused funds on the road are seeking investments in the buyout space, perhaps a signal that attention is being directed to high growth areas.”

With its previous two Asian-focused funds, KKR has invested in such companies as Panasonic Healthcare, Weststar Aviation Services, Sunner Development and Ticket Monster, according to its website.

KKR declined comment to comment on its latest Asian fund.