KKR - Kohlberg Kravis Roberts - Global Investment Firm, Makes Big Bet on India's Consumer & Credit

KKR Doubles Down on India’s Growth Story: Consumer and Credit in Focus

This post delves into the investment strategies of KKR & Co. (KKR) in India, highlighting the firm’s growing confidence in the domestic consumption sector and its plans to expand its private credit portfolio.

KKR Bullish on Consumer Demand

KKR remains optimistic about the long-term potential of India’s consumer sector, despite currently high valuations. KKR India sees the consumer space as a source of compelling opportunities. It believes this sector will continue to be a 15, 20, 25, 30-year story in India, underlining KKR’s strong conviction in its sustained growth trajectory.

Global Investment Flock to India

KKR’s bullishness on India reflects a broader trend of international investment firms entering the Indian market. India’s position as the world’s fastest-growing major economy, coupled with investment incentives offered by Prime Minister Narendra Modi’s government, is proving to be a magnet for foreign capital. Blackstone Inc. aims to add a significant USD 25 billion of Indian private equity assets over the next five years, while Goldman Sachs Group Inc. plans to invest up to USD 4 billion in the same period.

KKR’s Track Record in India

KKR has already established a substantial presence in India, having deployed roughly USD 11 billion over nearly two decades. The firm’s portfolio spans various sectors, including healthcare, life sciences, technology services, and consumer-focused businesses. KKR’s co-founder, Henry Kravis, reportedly indicated earlier this year that the firm intends to deploy its next USD 10 billion in India at an even faster pace than before.

Examples of KKR’s Investments

In the consumer segment, KKR has made strategic investments in Lenskart Solutions Pvt, a leading eyewear retail chain, and Lighthouse Learning Group, a prominent early childhood education provider. The firm has also acquired a stake in Mukesh Ambani’s retail business, further solidifying its footprint in the consumer sector.

KKR Eyes Opportunities in Manufacturing

Beyond consumer goods, KKR is exploring potential opportunities in the manufacturing sector, where it has limited experience with only one investment, Alliance Tire Group, in 2013. The Indian government’s push to create a manufacturing hub, backed by incentive programs totaling approximately Rs 2.7 lakh crore (USD 32.3 billion), is creating an attractive investment environment. This initiative has already seen success in attracting companies seeking alternatives to China, with firms like Apple and Samsung ramping up production in India.

KKR to Appoint External Advisors for Consumer Business

To enhance the performance of its consumer portfolio, KKR plans to appoint external executive advisors. These advisors will provide strategic guidance, support CEOs and management teams, and help them navigate the complexities of the Indian market.

Past Challenges in Local Credit

KKR’s journey in India hasn’t been without its setbacks. The firm’s local credit portfolio experienced losses and significant capital erosion in 2019 due to the shadow banking crisis. To address these challenges, KKR merged its credit unit with InCred Financial Services Ltd., a local consumer lender.

Focus on Private Credit Growth

Undeterred by past challenges in local credit, KKR remains committed to the Indian market through its Asia credit fund. In 2022, the company raised USD 1.1 billion for its debut KKR Asia Credit Opportunities Fund, designed to offer loans to high-performing companies across the Asia-Pacific region. Management at KKR anticipates that India will capture a significant share, roughly 20%, of the direct lending market within the region. This segment presents a major opportunity for future growth.

KKR’s View on Real Estate

While KKR boasts a substantial infrastructure portfolio in India, encompassing investments in roads, highways, and renewable energy, the firm has yet to enter the real estate sector. However, there are hints of a potential future move. KKR suggests they are not ruling out real estate entirely, but are strategically evaluating the most opportune time for investment.

KKR’s Long-Term Vision for India

Founded in 1976, KKR has evolved from a private equity firm into a diversified alternative asset manager with expertise in buyouts, credit, infrastructure, real estate, and insurance. During its recent investor day, KKR executives outlined their ambitious goal of reaching USD 1 trillion in assets under management within the next five years. They identified Asia, infrastructure, retirement, and wealth management as key areas.


A Multi-Pronged Approach for Capitalizing on Growth

KKR’s multi-pronged strategy demonstrates a well-rounded approach designed to capitalize on India’s growth across multiple sectors. The firm’s emphasis on the consumer sector, backed by its successful track record in areas like eyewear and education, positions it to benefit from India’s rising domestic consumption. While past challenges in local credit exist, KKR’s focus on scaling up its private credit business through its Asia credit fund underscores its confidence in the evolving Indian market. Moreover, the potential entry into real estate suggests KKR’s intention to capitalize on a sector that could benefit from India’s government incentives and growing infrastructure. Overall, KKR’s multi-pronged approach positions the firm to be a significant player in India’s growth story over the coming years.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.