KKR raises $2.5b for second Asia private credit fund
- ByStartupStory | January 15, 2026
KKR Raises $2.5B for Second Asia Private Credit Fund, Targets Regional Debt Boom
KKR & Co has closed its second Asia-focused private credit strategy at $2.5 billion, nearly doubling the $1.3 billion debut fund from 2023 and cementing its leadership in the region’s explosive non-bank lending opportunity.
The oversubscribed vehicle drew commitments from sovereign wealth funds, pensions, and family offices across Asia-Pacific, with strong re-ups from Fund I LPs. KKR now manages $12 billion+ in Asia credit strategies amid bank retrenchment and regulatory tightening creating $300 billion+ annual demand for direct lending.
Asia’s Private Credit Gold Rush Accelerates
KKR’s Asia Pacific Credit platform – launched post-2022 carve-out from its Global Atlantic insurance arm – targets the perfect storm of supply-demand imbalance. Regional banks face Basel III capital constraints just as mid-market firms (revenue $100M-$1B) seek growth capital beyond public markets.
Fund II strategy emphasizes three high-conviction pockets:
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Direct lending to healthy sponsors (PE portfolio companies) at SOFR+650bps
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Special situations – sponsor distress, court-supervised restructurings yielding 15%+ IRRs
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Asset-based finance – trade receivables, invoice discounting for supply chain players
Geographic focus spans India (40% allocation), Southeast Asia, Japan real estate bridge loans, and China select opportunities. Deployments average $50-150 million per deal with 4-6% portfolio yield premium over benchmarks.
Institutional Capital Chases 14% Returns
Asia private credit exploded from $20 billion AUM in 2020 to $150 billion today, but demand outstrips supply 5:1. KKR’s edge combines:
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Global Atlantic balance sheet: $100B+ permanent capital recycles into proprietary deals
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Local execution: 120-person team across Mumbai, Singapore, Tokyo, Seoul
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Middle-market sweet spot: Avoids mega-league tables where pricing compresses
Fund I’s 18% net IRR through 16 deployments validates timing. Anchor deals included $300M to Indian renewables developer and $200M Vietnamese consumer finance facility.
Perfect Timing: Banks Retreat, Corporates Need Capital
KKR converges four structural tailwinds:
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RBI/Singapore/HK tightening: Prime lending rates +300bps creates spread capture
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Japan carry trade unwind: Regional treasuries seek 400bps pickup over JGBs
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India capex cycle: $1.4 trillion infrastructure spend needs mezzanine debt
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China deleveraging: Selective opportunities in SOE privatization
Competition remains fragmented – local NBFCs lack scale, global peers underweight Asia. KKR captures pricing power through proprietary origination.
Path to $10B+ Asia Credit Franchise
Fund III targets $4-5 billion by 2028 as LP allocations double. Strategic hires from Credit Suisse, Deutsche Bank Asia coverage deepen deal flow. Co-investment vehicles unlock $10 billion+ deployable capital.
KKR proves Asia private credit isn’t America’s sequel – it’s the main event. When regional banks retrench and corporates crave growth capital, $2.5 billion becomes table stakes for the infrastructure powering tomorrow’s $50 trillion Asian economy.
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