Asia's entrepreneurs seeking more direct, speedier loans, says top PE investor

While much of Asia-focused capital has targeted distressed companies, KKR is keen on performing credit, backing acquisitions and helping families take their companies private. The firm seeks a mid-teens internal rate of return, Mr Dillard said.

Despite the opportunities, KKR has suffered setbacks in India, where a long-running shadow banking crisis followed by the devastation of the pandemic has crippled the economy. The firm committed to a US$150 million equity infusion to support the local unit and is now weighing a merger with InCred Financial Services Ltd, backed by former Deutsche Bank co-chief executive officer Anshu Jain.

Mr Dillard spoke with Bloomberg's Cathy Chan about the opportunities in Asia, the impact of Covid-19 and lessons learned in India. Edited excerpts from the interview follow.Underlying economic growth, but it's also a lot of companies can't get what they need from the bank market. They need more leverage, more flexible terms, more flexible covenant structures, cashflow lending versus asset-backed lending, subordinated credit versus senior secured asset-backed.

When we look at how credit is extended in the region, 80 cents of every dollar of credit in Asia is provided by the banks. That's 60 cents in Europe and less than 10 cents in the US.We're seeing a lot of really interesting transaction opportunities, even more post-Covid-19. We focused on three major factors. The first is, you see a lot of capital outflows from Asia.

The second piece is that we're seeing across our businesses, in equity and in credit, banks pulling back, really focusing on their home markets. We also see a broader, risk-off sentiment from the key banks across Asia, post-Covid-19. Both of these factors are limiting bank appetite for new credit.The third factor is, on the private market side, valuation expectations between buyers and sellers have widened.

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