KKR Gets Into Growth Equity (in China)

Well, it’s official: KKR is listed on the New York Stock Exchange, and was up nearly 1% in early trading. Guess this means we’re in for a slew of Blackstone vs. KKR stories at the end of each quarter (and I’ll probably write half of them)…

Those who buy KKR shares expect to be taking indrect part of big-dollar leveraged buyouts, but now it seems they also might be getting a piece of smaller deals.

The firm recently sent out books for the KKR China Growth Fund, which will write equity checks of between $35 million and $75 million for companies in Mainland China, Hong Kong and Taiwan. This is different than the $4 billion KKR Asian Fund, raised in 2007 and primarily focused on big buyouts throughout Asia (China, Japan, India, Australia, Korea, etc.).

“Eighty percent of the transactions in China are companies that require between $50 million and 70 million, and the $100 million-plus deals are few and far between,” says a source familiar with the situation. “Plus, most private equity deals in China — even the big ones – are for minority stakes, so it makes growth equity more of a natural fit for KKR… The day will come when there are leveraged buyouts for control in China, but it’s not today.”

The China Growth Fund target is $800 million, and seems to be the first time KKR has raised a private equity fund that didn’t consider leveraged buyouts to be its primary investment strategy. KKR China chief David Liu will run the show, but peHUB has learned that the firm plans to hire a dozen fund-specific staffers.

Private Equity Insider first broke news of the fund last week…