Credit crisis in India will spur more opportunities for KKR: Brian Dillard

 

Despite the opportunities, KKR has suffered setbacks in India, where a long-running shadow banking crisis followed by the devastation of the pandemic has crippled the economy.

KKR & Co., Asia’s largest private equity investor, says the region’s entrepreneurs are seeking more direct loans as the coronavirus pandemic dries up other avenues of funding.
More opportunities to lend are emerging particularly in Southeast Asia, where some governments have fallen short in supporting companies hit by Covid-19, according to Brian Dillard, who oversees credit for Asia Pacific. Under Dillard, KKR has lent north of $1 billion over the past year. The firm is now preparing to raise its first dedicated credit fund for the region, people familiar with the matter said, declining to be identified as discussions aren’t public.

Private credit, which bypasses traditional lending channels, is still nascent in Asia even as it’s ballooned globally into an $850 billion asset class dominated by U.S. deals. Fueled by a thirst for yield, the sector has gained fresh impetus from the pandemic with borrowers looking for speedier access to cash at a time when banks have grown cautious. Asia represents an enormous opportunity, Dillard said, with returns several hundred basis points above what’s on offer in the competitive U.S. and European markets.

“The Covid crisis has caused many traditional lenders to retrench, and we are finding our private credit capital is more relevant to a wider group,” said Dillard, who moved to Hong Kong in 2018 after ramping up KKR’s alternative credit and special situations businesses in New York. “The companies are healthy, the growth opportunities are still there, what they’re missing is the capital.”

Vietnam, Malaysia and Indonesia have seen the most activity, Dillard said, with a rising middle class spurring growth for businesses in property, healthcare and other consumer-focused areas. He’s hired former executives at Goldman Sachs Group AG, Credit Suisse Group AG and D.E. Shaw & Co. to expand the firm’s footprint in India, Southeast Asia and Australia.