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KKR closes $15 billion fund targeting consumption and urbanization in Asia

By Rita Liao

KKR has just closed $15 billion for its Asia-focused private equity fund, exceeding its original target size after receiving “strong support” from new and existing global investors, including those in the Asia Pacific region.

The new close came nearly four years after KKR raised its Asian Fund III of $9.3 billion and marks the New York-based alternative asset management titan’s ongoing interest in Asia. It also makes KKR Asian Fund IV one of the largest private equity funds dedicated to the Asia Pacific region.

KKR itself will inject about $1.3 billion into Fund IV alongside investors through the firm and its employees’ commitments. The new fund will be on the lookout for opportunities in consumption and urbanization trends, as well as corporate carve-outs, spin-offs, and consolidation.

KKR has been a prolific investor in Asia-Pacific since it entered the region 16 years ago with a multifaceted approach that spans private equity, infrastructure, real estate and credit. It currently has $30 billion in assets under management in the region.

The firm has been active during COVID-19 as well. On the one hand, the pandemic has accelerated the transition to online activities and singled out tech firms that proved resilient during the health crisis. Market disruption in the last year has also made valuations more attractive and pressured companies to seek new sources of capital. All in all, these forces provide “increasingly interesting opportunities for flexible capital providers like KKR,” the firm’s spokesperson Anita Davis told TechCrunch.

Since the pandemic, KKR has deployed about $7 billion across multiple strategies in Asia.

While KKR looks for deals across Asia, each market provides different opportunities pertaining to the state of its economy. For deals in consumption upgrades, KKR seeks out companies in emerging markets like China, Southeast Asia and India, said Davis. In developed countries like Japan, Korea and Australia, KKR observed that continued governance reform, along with a focus on return on equity (ROE), has driven carve-outs from conglomerates and spin-offs from multinational corporations, Davis added.

Specifically, KKR’s private equity portfolio in Asia consists of about 60 companies across 11 countries. Some of its more notable deals include co-leading ByteDance’s $3 billion raise in 2018 amid the TikTok parent’s rapid growth and bankrolling Reliance Jio with $1.5 billion in 2020.

“The opportunity for private equity investment across Asia-Pacific is phenomenal,” said Hiro Hirano, co-head of Asia Pacific Private Equity at KKR. “While each market is unique, the long-term fundamentals underpinning the region’s growth are consistent — the demand for consumption upgrades, a fast-growing middle class, rising urbanization, and technological disruption.”

The Asian Fund IV followed in the footsteps of KKR’s two other Asia-focused funds that closed in January, the $3.9 billion Asia Pacific Infrastructure Investors Fund and the $1.7 billion Asia Real Estate Partners Fund.

Amazon acquires Indian retail startup Perpule

By Manish Singh

Amazon has acquired a startup in India that is helping offline stores go online, the e-commerce group’s latest attempt to make inroads in the world’s second most populous nation where brick and mortar continue to drive more than 95% of sales.

The American e-commerce group said on Tuesday evening that it has acquired Perpule, a four-year-old startup. A regulatory filing showed Amazon Technologies paid $14.7 million to acquire the Indian startup in an all-cash deal. The company is expected to spend an additional $5 million or so to compensate Perpule’s employees.

Perpule, which had raised $6.36 million (per insight platform Tracxn), offers a mobile payments device (point of sale machine) to offline retailers to help them accept digital payments and also establish presence on various mini app stores including those run by Paytm, PhonePe, and Google Pay in India.

“Perpule has built an innovative cloud-based POS offering that enables offline stores in India to better manage their inventory, checkout process, and overall customer experience,” an Amazon spokesperson said in a statement.

“We are excited to have the Perpule team join us to focus on providing growth opportunities for businesses of all sizes in India while raising the bar of the shopping experience for Indian customers.”

Founded in late 2016, the Indian startup’s first product was focused on helping customers avoid queues at super chains such as Shoppers Stop, Spar Hypermarket, Big Bazaar, and More. But the product, said Abhinav Pathak in a recent interview, wasn’t scaling, which is when Perpule pivoted.

The startup — which counts Prime Venture Partners, Kalaari Capital, and Raghunandan G (founder of neobank Zolve) among its investors — has further expanded in recent years, launching products like StoreSE, which enables a business to support group ordering.

Last year, it also expanded geographically; bringing its offerings to Southeast Asian markets including Indonesia, Malaysia, Thailand, Singapore, and Vietnam.

Amazon has aggressively engaged with physical stores in India in recent years, using their vast presence in the nation to expand its delivery network and warehouses and even just relying on their inventory to drive sales.

The company’s push into physical retail comes as Flipkart, and Reliance Jio Platforms (backed by Facebook and Google), which last year raised over $20 billion, also race to capture this market. The acquisition of Perpule comes less than a week after Google backed DotPe, a startup that offers several similar products.

These neighborhood stores offer all kinds of items, are family-run and pay low wages and little to no rent. Because they are ubiquitous — there are more than 30 million neighborhood stores in India, according to industry estimates — no retail giant can offer a faster delivery. And on top of that, their economics are often better than most of their digital counterparts.

Tata Group reaches agreement to buy majority stake in BigBasket

By Manish Singh

Indian conglomerate Tata Group has reached an agreement to acquire a majority stake in grocery delivery startup BigBasket, a source familiar with the matter told TechCrunch.

The salt-to-software giant is buying over 60% stake in BigBasket, valuing the Indian startup between $1.8 billion to $2 billion, the source said, requesting anonymity as the deal is still private. BigBasket has raised more than $750 million prior to the deal with Tata.

Indian news network ET Now reported on Tuesday that the two firms were in advanced talks, signals of which began to emerge in local media two quarters ago. Two BigBasket co-founders and Tata Group did not respond to a request for comment.

Chinese internet giant Alibaba, which owns nearly 30% stake in BigBasket, and a handful of other investors are getting a near complete exit from the startup as part of the deal with Tata Group, the source said. New Delhi introduced restrictions last year that made it difficult for Chinese investors to write checks to Indian firms.

The move comes as Mumbai-headquartered Tata Group, which reported a revenue of $113 billion in 2019 and operates several popular brands such as Jaguar Land Rover and tea maker Tetley, looks to expand to more consumer businesses and works to develop a so-called super app in the world’s second-largest internet market.

Bangalore-headquartered BigBasket, which competes with SoftBank-backed Grofers and Reliance’s JioMart, operates in over two dozen cities in India and turned profitable months into the coronavirus pandemic as sales skyrocketed on the platform.

BigBasket and Grofers’s userbases skyrocketed by as much as 80% last year, analysts at Citi Bank estimated in recent note, adding that JioMart, run by India’s richest man Mukesh Ambani, had already started to pose serious competition.

In a recent note to clients, Bank of America analysts estimated that the online grocery delivery market could be worth $12 billion in India by 2023.

“Competition is high in the sector with large verticals like BigBasket/Grofers and horizontal like Amazon/Flipkart trying to convert the unorganized market to organized one. Till recently the No 1 player in the space was BigBasket, with it hitting $1 billion annualized GMV & selling over 300,000 orders every day. Reliance Industries also threw its hat with the company launching its JioMart app in May-20 across 200 cites,” they wrote.

The expansion of Reliance Industries, one of India’s largest industrial houses, in e-commerce last year may have prompted Tata Group to accelerate its digital efforts. Ambani raised more than $26 billion for his telecom and retail empires Jio Platforms and Reliance Retail last year from a roster of marquee investors including Facebook and Google.

Tata Group was working to expand to several consumer-facing digital services as early as 2016, but a boardroom coup put all those plans on the back burner, The Information reported in December.

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