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HONG KONG (Reuters) - Private equity firm KKR & Co (KKR.N) said on Friday it raised $9.3 billion for its most recent Asia-focused buyout fund, more than expected and setting a record for the region as it looks for larger deals.
Topping its initial target of $7 billion, the size of its Asian Fund III underscores greater opportunities and appetite for deals in Asia Pacific, where private equity firms are increasingly setting their sights on buying control of companies.
"We see a diverse set of opportunities across Asia Pacific stemming from rising consumption and urbanization trends in key markets as well as larger carve-out and cross-border transactions in countries such as Japan," Ming Lu, head of Asia private equity at KKR, said in a statement.
Asia-focused funds are on a roll this year, with private equity firms raising $11.7 billion so far with 16 funds. That compared with $13 billion from 15 funds for all of 2016, according to data provider Preqin.
Volumes are set to grow further in coming months as companies including TPG Capital Management [TPG.UL], Bain Capital and Blackstone Group LP (BX.N) raise capital for their real estate, credit and buyout funds.
KKR's new fund will add to the pile of cash in buyout firms' coffers, which reached $136 billion at the end of 2016 - the third-highest ever level for so-called "dry powder" or unemployed capital, according to Prequin.
The accumulation of capital comes as deal sizes grow.
Although Asian deal activity fell 30 percent last year to $54.6 billion and 2017 has been slow with $22.6 billion of deals announced so far, the average deal size this year is around $119 million, near a record set in 2014, according to Thomson Reuters data.
KKR set a previous record for Asia private equity fundraising with its $6 billion Asian Fund II in 2013, which has been fully deployed and posted a gross internal rate of return (IRR) of 29.1 percent through March 2017.
Returns above 20 percent are considered good for private equity funds.
KKR said it has invested more than $12 billion across the region in about 55 companies since it first set shop in Asia in 2006.
It has been particularly busy with large deals in Japan in recent months, announcing a $2.3 billion acquisition for Hitachi Ltd's (6501.T) chip-making equipment and video solution unit in April and $1.3 billion deal for power tools firm Hitachi Koki Co Ltd 6581.T in January. That followed a $4.5 billion deal for auto parts supplier Calsonic Kansei Corp 7248.T late last year.
KKR is also one of the bidders for Toshiba Corp's (6502.T) semiconductor business - a deal that the Japanese conglomerate has valued at at least $18 billion. It is expected to team up with Japanese state-backed investors in a consortium for its offer.
Other recent deals include teaming up with Canada Pension Plan Investment Board (CPPIB) for a 10.3 percent stake in Indian telecom tower operator Bharti Infratel (BHRI.NS) worth $953 million in March, and an investment of $250 million in Vietnamese food producer Masan Group Corp MSN.HM in April.
Reporting by Elzio Barreto; Editing by Edwina Gibbs