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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.

Indian stock exchanges approve $3.4B Reliance and Future deal in setback for Amazon

By Manish Singh

Indian stock exchanges approved the $3.4 billion deal between retail giants Reliance Retail and Future Group on late Wednesday in yet another setback for Amazon, which has invested over $6.5 billion in the world’s second largest internet market and sought to block the aforementioned deal.

The Bombay Stock Exchange said in a notification that it had spoken with India’s markets regulator, the Securities and Exchange Board of India (SEBI), and had no objection or adverse observation on the deal.

Wednesday’s notification is the latest setback for Amazon, which had written to SEBI and Indian antitrust watchdog to block the multi-billion deal between Future Group and Reliance Retail, the two largest retail chains in India. Last year, India’s antitrust group gave a go ahead to the deal to the Indian firms.

“We hereby advise that we have no adverse observations with limited reference to those matters having a bearing on listing/de-listing/continuous listing requirements within the provisions of Listing Agreement, so as to enable the company to file the scheme with Hon’ble NCLT [National Company Law Tribunal],” the notification read. SEBI has advised Future to share various aspects of its ongoing litigation with Amazon to NCLT, whose approval for the deal is pending.

Amazon bought 49% stake in one of Future’s unlisted firms in 2019 in a deal that was valued at over $100 million. As part of the deal, Future could not have sold assets to rivals, Amazon has said in court filings.

Things changed last year after the coronavirus pandemic starved the Indian firm of cash, Future Group chief executive and founder Kishore Biyani said at a recent virtual conference. In August, Future Group said that it had reached an agreement with Ambani’s Reliance Industries, which runs India’s largest retail chain, to sell its retail, wholesale, logistics and warehousing businesses for $3.4 billion.

Amazon later protested the deal by reaching an arbitrator in Singapore and asked the court to block the deal between the Indian retail giants. Amazon secured emergency relief from the arbitration court in Singapore in late October that temporarily halted Future Group from going ahead with the sale.

The two estranged partners also fought at the Delhi High Court last year, which in a rare glimmer of hope for the American giant rejected Future’s plea for an ad-interim injunction to restrain Amazon from writing to regulators and other authorities to raise concerns over — and halt — the deal between the two Indian giants.

An Amazon spokesperson told TechCrunch that the firm will continue to pursue legal remedies. “The letters issued by BSE & NSE clearly state that the comments of SEBI on the ‘draft scheme of arrangement’ (proposed transaction) are subject to the outcome of the ongoing Arbitration and any other legal proceedings. We will continue to pursue our legal remedies to enforce our rights,” the spokesperson said.

At stake is India’s retail market that is estimated to balloon to $1.3 trillion by 2025, up from $700 billion in 2019, according to consultancy firm BCG and local trade group Retailers’ Association India. Online shopping accounts for about 3% of all retail in India.

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