Mint Exclusive: KKR eyes its largest Asia infra fund topping $9 bn, India to corner a big slice

Mint

26-05-2025

Private equity giant Kohlberg Kravis Roberts (KKR) is raising its third and largest-ever Asia infrastructure fund that could top $9 billion, said three people familiar with the matter, with a large share going to India's expanding road and energy to logistics networks.
'The firm has already secured commitments for a first close for the new fund from its limited partners and is expected to announce it soon," said the first of the three people, who spoke on the condition of anonymity. 'While the final fund size is yet to be confirmed as fundraising continues, it remains in the $9 billion range, with India remaining a key market, consistent with the previous funds."
The new fund surpasses the debut Asia fund of $3.9 billion and the $6.4 billion fund II that closed last year. As much as 30% of the corpus could be allocated to Indian infrastructure, the people said. The country accounted for 25-30% of KKR's first two Asia funds.
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KKR is not alone. Rival global investors like Blackstone and Brookfield have also ramped up bets on Indian highways to renewable energy plants as the country expanded and upgraded its core infrastructure base over the past decade, driven by public and private capital. Morgan Stanley expects the overall spending on the sector to rise steadily from 5.3% of the GDP in FY24 to 6.5% by FY29.
A combination of factors–government initiatives, rising urbanization, population growth, and increasing foreign investment–have served as key growth drivers for the infrastructure industry, encouraging innovation and strengthening value chains along the way, according to Vipin Singhal, director, Anand Rathi Investment Banking. 'As a result, India is increasingly being viewed as a strategic anchor for Asia-Pacific infrastructure portfolios, especially as investors diversify away from China due to ongoing geopolitical tensions."
KKR's new fund is expected to focus on roads and highways, energy transition plays, besides renewables, while retaining flexibility to pursue other infrastructure-linked assets, the third person quoted above said.
KKR declined to comment on Mint's queries.
Big India bet
KKR's Asia infrastructure strategy is led by Hardik Shah, who joined the firm in 2018. In 2021, it hired Ami Momaya from the National Investment and Infrastructure Fund (NIIF); she was promoted to managing director for infrastructure, Mumbai in January 2025.
Over the past few years, KKR has stepped up its India play through investments in power transmission via India Grid Trust (Indigrid), renewable energy ventures like Virescent Infrastructure and Hero Future Energies, highway assets under Highway Infrastructure Trust, decarbonization efforts through Serentica Renewables, and warehousing with Leap India.
KKR has also begun booking profits from the Indian market. In February 2024, it exited Indus Towers Ltd by selling its entire 4.85% stake for around ₹2,750 crore. In December, it pared a 2.6% unitholding in Indigrid--India's first listed power sector infrastructure investment trust (InvIT)--for ₹277 crore.
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Although KKR recently exited from Indus Towers, India Grid Trust, and a few more infrastructure portfolio companies, KKR still plans to deploy its next $10 billion in India at an accelerated pace, signalling a long-term bet on India's growth story, Singhal said.
While KKR has traditionally focused on credit, real estate, and private equity, it is now making a strong push into infrastructure—especially in tech-driven areas like data centres, cybersecurity, and AI platforms—aligning with India's digital transformation, he pointed out. 'It's more of a strategic reallocation rather than an exit from the Indian infrastructure space."
During the firm's Q1 earnings call on 1 May, Craig Larson, partner and head of investor relations at KKR, said, 'We'd expect we'll have a couple of closes in America and we'll launch fundraising for the flagship Asia strategy on the heels of that…a topic that is becoming front of mind."
Larson also pointed to ongoing fundraising across Asia infrastructure, wealth platforms, and climate-focused vehicles.
As of this year, KKR has fully deployed capital from its first two Asia infra funds, said the third person cited earlier. The strategy, which began in 2019, has grown to roughly $14 billion in assets under management (AUM), forming part of KKR's broader $59 billion global infrastructure business.
Rival global investors are stepping up their presence in Indian infrastructure. Brookfield said in May it plans to scale its India assets under management from $30 billion to $100 billion, with infrastructure, particularly energy, renewables, digital, transport, and utilities, at the core. Its current India infrastructure AUM stands at $12 billion.
Blackstone, too, aims to double its India exposure from $50 billion to $100 billion, expanding into infrastructure and credit alongside its large real estate play, the firm said in March.
Tailwinds ahead
The surge in global capital coincides with robust market projections for the country's infrastructure sector.
India's logistics sector, valued at $317.26 billion in 2024, is expected to grow to $484.43 billion by 2029, while the warehousing market is projected to reach ₹2,243.79 billion by 2026, an annual growth rate of nearly 11%, according to a February report by the India Brand Equity Foundation (IBEF), a trust under the commerce ministry.
The country improved its ranking in the World Bank's Logistics Performance Index to 38 in 2023, up from 44 in 2018, Singhal of Anand Rathi Investment Banking said.
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Real estate (Reits) and infrastructure investment trusts (InVITs) are playing an increasingly important role in funding these projects. Reits and InVITs have amassed $15.6 billion ( ₹1.3 lakh crore) in four years through March 2024, the IBEF report said, citing data from the Reserve Bank of India.
India's real estate sector, according to the report, alone drew $2.77 billion in investments in the second quarter of 2024.
The push continues in the Union Budget 2025–26, with the capital investment outlay for infrastructure raised to ₹11.21 trillion, or 3.1% of the GDP, up from ₹10 trillion in the previous fiscal, amid the government's continued emphasis on infrastructure-led growth.
According to Singhal, India is set for a major infrastructure push by FY28, with road investments expected to nearly double from $28 billion to $53 billion (17% CAGR), irrigation and water from $113 billion to $208 billion (13% CAGR), railways from $122 billion to $196 billion (13% CAGR), and energy and power from $161 billion to $282 billion (15% CAGR).