kkr global private equity overview - asia pacific

8/10/2019 KKR Global Private Equity Overview - Asia Pacific

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Asia-Pacific Private Equity Joseph Y. Bae


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Global expertise delivered with local resources

Demonstrated experience in operational valuecreation, capital markets, and stakeholdermanagement, plus senior advisors

Completed/committed 26 investments since 2005 Invested and committed ~$4.7bn of equity across 7

countries in both control and minority deals 1.9x gross MOIC (1.8x net MOIC), 22% composite

gross IRR (19% composite net IRR) across all Asianinvestments (1)

$4.0bn Asian Fund raised in 2007, ~70% alreadyinvested/committed today in Greater China, SoutheastAsia, India, Korea, Japan and Australia

$1.0bn China Growth Fund raised in 2011, ~37%invested/committed today

KKR Asia Today

First office established in 2005; today, dedicated localteams spanning 6 regional offices in Hong Kong, Tokyo,Sydney, Beijing, Mumbai and Seoul

93 executives across Asia, 46 in private equity, senior PEteam with 14+ years of experience and minimal turnover

Leading

Pan-AsianPlatform

Pan-AsianPool ofCapital

Strong &ConsistentPortfolio

MultifacetedCapabilities

Note: As of May 2012, unless otherwise indicated. Senior team indicates Private Equity Members, Managing Directors, Directors and Principals.

(1) Return information as of March 31, 2012. All Asian investment returns presented are net of transaction costs and performance fees, but gross of management fees. Management fees are imposed at the fund or account level,and have not been allocated to each individual investment for purposes of this presentation. After payment of management fees at the fund or account level, the actual return to investors with respect to these investments wasless than indicated above. The specific companies included in the returns are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fundand headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable. Includes all investments made in Asia beginning with theinvestment in Avago in 2005 across all of our private equity funds, including European I (2000 vintage), Millennium (2002 vintage), European II (2005 vintage), 2006 Fund (2006 vintage), Asian Fund (2007 vintage) and ChinaGrowth Fund (2010 vintage). Past performance is no guarantee of future results. See Important Information for how our performance is calculated.


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Tokyo office opens

Hong Kong office opens;KKR Asia begins operations

$1.0 billion KKR

China Growth Fundis raised

2005 2006 2007 2008 2009 2010 2011

Sydney office opens

Beijing office opens; KKRCapstone, CPG & KCM begin in

Asia

Mumbai office opens

Seoul office opens

Further build-out of KKRCapstone,

KCM and CPG

$4.0 billionKKR Asian Fund

is raised

Timeline of KKR Asia

KKR Asia Teams Build -out

2

+73% CAGR

2011

92

2008 2009 2010

77

43

61

2007

27

2006

16

2005

Public Affairs

Legal / Compliance

Finance / HR / IT

Senior Advisors / Industry Advisors

KCM / KAM

Client & Partner Group

KKR Capstone Asia

Private Equity

Note: As of May 2012.

2012

93


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Experienced local investment teams with strong trackrecords are integrated with KKRs global industry teams

Strong Regional Presence Covering Six Core Markets in Asia

4 Private EquityRegional Capstone Coverage

Korea

8 Private Equity2 KKR Capstone Capable (3)

5 KKR Capital Markets2 Senior Advisors

1 Finance

India

7 Private EquityRegional Capstone Coverage

1 Senior Advisor

Southeast Asia

5 Private Equity1 KKR Capstone + Regional

Capstone Coverage1 Senior Advisor

Australia

16 Private Equity7 KKR Capstone Capable (1)

2 Client & Partner Group3 Senior Advisors

Greater China

6 Private Equity2 KKR Capstone (2)

2 Client & Partner Group3 Senior Advisors

Japan

10 KKR Capstone5 Client & Partner Group*

3 KKR Capital Markets*2 Legal & Compliance

1 Public Affairs1 Finance

1 Human Resource

Hong Kong (Generalists)

46 private equity investmentprofessionals in region

93 executives in Asia in total,spanning all KKR and KKR Capstonefunctions

Note: As of May 2012. Asterisk (*) denotes Rex Chung and Stanley Ho are included in both KCM and CPG headcounts.(1) 3 located in Greater China and 4 in Hong Kong with Chinese language capability.(2) 1 located in Tokyo and 1 in Hong Kong with Japanese language capability.(3) 1 located in India and 1 expected to be relocated from Hong Kong.


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Differentiated Approach to Asia


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A Collection of Attributes Differentiates Us

Deep InvestmentExperience

DedicatedLocal Teams

DifferentiatedProprietary

Sourcing

Pan-Asian,Flexible

InvestmentApproach

Value CreationThrough

KKR Capstone

KKR CapitalMarkets

One - Firmwith Global

Reach

Alignment ofInterest with

Our LPs

People& Culture

KKRs global resources + Asia teams local approach= High quality franchise


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Proprietary Investment Sourcing Process

Proactive outreach, strong reputation and relationships, focused local networks,and resources valued by management teams and entrepreneurs yield investmentsnot available to others

Note: Data in the chart above reflects all private equity investments announced or completed in Asia through May 2012; percentages based on number of transactions. Limited process is definedas a sourcing process involving three or f ewer interested parties, including KKR. Sourcing allocation for Asian Fund II may differ.

Auction 8% BIS Oriental Brewery

Auction

8%

Limited Process 31%

Proprietary

62%

Proprietary 62% Coffee Day

China Chord Blood China Outfitters Dalmia Cement Far East Horizon Masan Consumer Modern Dairy Novo Holdco Limited

Rundong Automobile

Seven West Media Sino Prosperity RE Tianrui Cement TVS Logistics United Envirotech VATS Liquor Yageo

Limited Process 31% Aricent Avago Bharti Infratel CICC Intelligence Magma Fincorp MMI Unisteel

Differentiated Proprietary Sourcing


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Well Diversified Portfolio of Asian Investments (1)Pan-Asian, Flexible Investment

Approach

By Structure (2) by Remaining Value

By Industryby Remaining Value

By Geographyby Remaining Value

Real Estate1%

Manufacturing7%

Financial Services11%

Consumer Products25%

Technology30%

Media5%

Retail4%Telecom

4%

Services6%

Recycling

7%

Non-Control37%

Control63%

Note: Data as of March 31, 2012.(1) All Asian investments include those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund and

headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable. Includes allinvestments made in Asia beginning with the investment in Avago in 2005 across all of our private equity funds, including European I (2000 vintage), Millennium (2002 vintage), EuropeanII (2005 vintage), 2006 Fund (2006 vintage), Asian Fund (2007 vintage) and China Growth Fund (2010 vintage). Diversification of Asian Fund II investments may differ.

(2) Control transaction indicates buyout or JV transactions where KKR, along with other financial investors if applicable, collectively held equity ownership of 50% or more. Non - control indicates growth or minority investments.

Vietnam3%Japan

6%Australia

10%

South Korea17%

India17%

Singapore20%

Greater China27%


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Investing Thematically

Across Control Oriented and Minority Stake Transactions

DomesticConsumption

#1

Financial Services#2

Domestic consumptionplays in emerging growthmarkets

ModernDairy

Corporate and consumerpopulation whose bankingneeds are not met and lackof direct access to lending

Support urbanizationtrends and sustainableeconomic growth

Specialized Tech &Manufacturing

#4

Outsourced R&D and

manufacturing capabilityfor specialized precisionengineering

Large-Scale CorporateCarve-outs

#5

Complicated operational

carve-outs creatingindustry leading businesses

InfrastructureDevelopment

#3

BhartiInfratel

Pan-Asian, Flexible InvestmentApproach

Note: As of May 2012. The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsoredprivate equity fund and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.

Sino ProsperityRE Fund JV

Novo HoldcoLimited


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Australia Singapore

Australian provider ofmaterials and logisticsservices to the miningsector

Australian multi facetedmedia group withtelevision, magazinepublishing and online

business lines

Designer, developer,and global supplierof fabless semi-conductors

Precision engineering

manufacturer ofHDD, non-HDD, andcapital equipment

Global provider ofhigh-precisioncomponents

India

Communicationsindustry softwaresolutions provider

Investing by Country and Structure:Traditional Buyouts

Korea

Japan

South Koreas largestbeer company

Comprehensiverecruitment servicesprovider

Note: The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fundand headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.



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ModernDairy

China IndiaLeading investment bank

Market-leading SME financingcompany

Dairy group operating large-scale dairy farms

Strong regional cementproducer

Leading regional autodealership

Leading high-end liquor storechain operator

Leading water treatment andrecycling solution provider

JV platform with a leading real

estate developer

Leading apparel design,manufacturing and sales

Fast-growing fashion apparelretailer

Chinas leading cord bloodbanking operator

TaiwanHigh quality passivecomponent provider

Investing by Country and Structure:Growth and Minority

Note: The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fundand headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the co mpanies identified was or will be profitable.

BhartiInfratel

Leading global independenttelecom tower company

Leading food and beverageretailer

Leading private cementcompany

Indias fastest growing publiclylisted non-bank financecompany

Leading third-party logisticscompany

VietnamVietnams largest localpackaged food company


Sino ProsperityRE Fund JV

Novo HoldcoLimited


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Asian Portfolio Performance


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Strong Asian Portfolio Performance

Revenue EBITDA

The specific companies included are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund andheadquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies included was or will be profitable. Figures converted to US$ using spotexchange rate as at the end of the period.

US$ in millions

All Asian Investments Performance

US$ in millions

Note: As of December 31, 2011. For CICC, Operating Profit is used as a proxy for EBITDA. For Far East, pre-provision operating profit is used as a proxy for EBITDA. For Magma, Net OperatingIncome and Net Income are used as a proxy for Revenue and EBITDA, respectively.For CY2009 vs. CY2010 comparison: Excludes businesses invested in 2011 (Masan Consumer, Magma Fincorp, Sino Prosperity, UEL, China Outfitters). Dalmia also excluded given financialsfor 2009 were not available due to its f inancial restructuring.For CY2010 vs. CY2011 comparison: Excludes China Outfitters which was made in December 2011. For Tianrui, Far East, and Modern Dairy, 2011 vs. 2010 CY data is as of LTM ended June30, the latest publicly available financials. For Avago, 2011 vs. 2010 CY data is as of LTM ended July 31. Coffee Day excluded given financial restructuring in 2010, which is incomparable to2011 results.

+29%

CY 2010

12,408

CY 2009

9,590

+44%

CY 2010

3,377

CY 2009

2,340

+15%

CY 2011

14,618

CY 2010

12,727

+19%

CY 2011

3,396

4,042

CY 2010


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Asian Investment Realizations in 2010 - YTD 2012

KKRs Asian investments have distributed or have announceddistributions of ~$2.3bn in 2010 - YTD 2012

IPO Secondary StrategicSale RefinancingDistribution

($mm)

Avago $1,532

Aricent $73

Far EastHorizon (1) N/A

Intelligence (2) $135

MMI (2) $27

Modern Dairy $79

TianruiCement (3) $79

Seven WestMedia (4) $404

Note: As of March 31, 2012, unless otherwise noted. The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) ownedby a KKR-sponsored private equity fund and headquartered, incorporated or have significant operations in Asia.

(1) No distribution was made following the Far East Horizon IPO as the Company only issued primary shares.(2) Represents return of equity bridge investment.(3) Partial sale. Completed in 2010; IPO on HK Stock Exchange in December 2011, though no distributions made following IPO as the Company only issued primary shares.(4) Represents cash portion distributed from the sale of Seven Media Group to West Australian Newspaper Holdings Ltd.

2012 Outlook includes additional potential realizations throughIPOs & secondaries and strategic stake sales


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All Asian Composite Returns vs. Market IndicesAs of March 31, 2012

Note: The companies included are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund andheadquartered, incorporated or have significant operations in Asia. Includes all investments made in Asia beginning with the investment in Avago in 2005 across all of our private equity funds,including European I (2000 vintage), Millennium (2002 v intage), European II (2005 vintage), 2006 Fund (20 06 vintage), Asian Fund (2007 vintage) and China Growth Fund (2010 v intage). TheIRRs are calculated using the actual date of the cash flow(s) and the unrealized value as of the valuation date. Past performance is no guarantee of future returns.

(1) The net returns presented are net of transaction costs and performance fees, but gross of management fees. Management fees are imposed at the fund or account level, and have not beenallocated to each individual investment for purposes of this presentation. After payment of management fees at the fund or account level, the actual net return to investors with respect tothese investments was less than indicated above.

(2) Market indices for S&P 500 and MSCI Asia Pacific include dividends reinvested. The market index returns assume that on the day a portfolio investment is made, a hypothetical investment in amatching amount is made in the given index. For each date on which either a portion or all of the portfolio investment is sold, a hypothetical index multiple (factor) is calculated by comparingthe change in index value between the two dates. The cost of the investment sold (or portion of cost sold) is multiplied by this factor, resulting in a hypothetical index value. The return iscalculated using these dates of investment and hypothetical value(s) generated. See Important Information for additional details.

MSCI AsiaPacific (2)

15.7%

S&P 500(2)

12.5%

MSCI Asia Pacific (2)

3.4%

S&P 500 (2)

6.6%

All AsianComposite Net (1)

19.1%

All AsianComposite Gross

21.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

All Asian CompositeOutperformance(On Net Return)


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Summary


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KKR Asia Summary

SignificantPlatformBuild-Out

Established aleading Asianinvestmentplatform

6 offices acrossAsia with 90+professionals,spanning allKKR functions

StrongAsian Portfolio

Performance

Invested~$4.7bn ofequity across 7countries, over10 industries inboth control andminority deals (1)

1.9x gross MOIC(1.8x netMOIC), acrossall Asianinvestments (2)

AcceleratingInvestments/Distributions

Invested $1.6bnin Asia during2010 to YTD2012 (1)

Returned~$2.3bn in2010 to YTD2012 (1)

PositiveOutlook forthe Region

Strong growthexpected drivenby emergingeconomies

Robust pipelineof newinvestmentopportunities

Note: Past performance is no guarantee of future results. See Important Information for how our performance is calculated. Unless indicated, the above reflects current market views, opinionsand expectations of KKR based on its historic experience and proprietary research. Historic market trends are not reliable indicators of actual future market behavior or future performanceof any particular investment which may differ materially, and should not be relied upon as such. There can be no assurance that investors in any account, or fund or other vehicle will receivea return of capital. The returns presented are net of transaction costs and performance fees, but gross of management fees. Management fees are imposed at the fund or account level, andhave not been allocated to each individual investment for purposes of this presentation. After payment of management fees at the fund or account level, the actual return to investors withrespect to these investments was less than indicated above.

(1) As of May 2012.(2) As of March 31, 2012, The specific companies included are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored

private equity fund and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.Includes all investments made in Asia beginning with the investment in Avago in 2005 across all of our private equity funds, including European I (2000 vintage), Millennium (2002 vintage),European II (2005 vintage), 2006 Fund (2006 vi ntage), Asian Fund (2007 vintage) and China Growth Fund (2010 vintage).

kkr global private equity overview - asia pacific

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