KKR puts off plan to float Rs 5,000-crore India-focused credit fund

Global investment firm KKR has decided to put off its plans to float a Rs 5000-crore India-focused credit fund, said people in the know. They said the macro environment in the country was “not conducive” to launch the fund.

KKR, which manages $208 billion of assets globally, had met a few big global investors for the fund in the middle of 2019 as part of its roadshows.

“The macro-environment is not conducive. Credit flow in the country is chocked and companies are finding it difficult to get working capital. In this scenario, they (KKR) felt it is prudent to wait for the time being,” a source said. “Banks are battling their own issues. Co-investing with them is also a challenge.”

When contacted, a KKR spokesperson said: “We aren’t able to comment on fundraising plans or speculation.”

The source quoted earlier said that the fund manager is closely looking at the macro-economic situation and the liquidity scenario before raising the credit fund. “They want to see the risk-reward situation over the next 12-18 months before they raise any major fund,” said the source, adding, after the CG Power episode, the firm has learnt that doing due diligence in listed companies was difficult.

In September, KKR acquired a 10 per cent stake in CG Power by invoking the pledge on shares provided as collateral for credit facilities extended to entities related to promoter Gautam Thapar as the promoter group could not repay KKR. The CG Power board removed Thapar as chairman of the company on August 30.

Café Coffee Day, another firm in which KKR had invested, has been selling assets to repay dues after the death of its promoter V G Siddhartha.

KKR also saw a couple of major changes in its key management personnel recently. B V Krishnan, chief executive officer (CEO) of its non-banking financial company KKR India Financial Services quit, citing personal reasons.

Rating agency CRISIL recently cut the long-term debt instruments and bank facilities of KKR India Financial Services to “AA/Stable” from “AA+/Stable”.

In a report dated October 1, the rating agency cited “deterioration in the standalone credit profile marked by expected pressure on asset quality and its consequent impact on the earnings profile and capitalisation metrics” for the downgrade.

Over the last three financial years, KKR India Finance’s loan book has grown at a CAGR (compound annual growth rate) of 35 per cent to Rs 5,694 crore, as on March 31, according to the CRISIL report. The loan book stood at nearly Rs 5,878 crore as on June 30, 2019.

KKR also runs an NBFC focused on real estate in the country where Singapore's GIC is a key investor.