Connect with us

Finances

KKR Weighs Entering Private Credit in Japan to Challenge Banks

Published

on

Spread the love

KKR & Co. is considering entering the private credit market in Japan to provide an alternative to bank loans.

“It will be a medium to long-term initiative,” Hiro Hirano, the head of KKR Japan said in an interview. “I think it is very important in Japan that we do it ourselves.”

Advertisement

The $1.7 trillion private-credit industry has swelled in the US and Europe by focusing on companies with high credit risk and private equity funds that need help financing acquisitions. In Japan, most direct lending has been done overseas and the domestic loan market is dominated by major banks.

In addition to private credit, Japan is the destination for about 40% of KKR’s investment in Asia. The firm sees Japanese companies increasingly willing to sell non-core businesses that can do better as individual entities. These so-called carve-outs often provide returns that are higher than other investments.

Advertisement

Global Atlantic Financial Group, a U.S. insurance company affiliated with KKR, is purchasing insurance policies from Japanese life insurance companies and may use private credit investments in Japanese yen as an investment vehicle.

“An overwhelming number of Japanese companies and businesses have the potential to grow, but are not performing well enough,” Hirano said.

Advertisement

The firm also plans to increase its offerings for institutional investors and high net-worth individuals in Japan. KKR is in discussions with domestic securities companies to offer products for individual investors. It already has a joint venture asset management company with SBI Holdings Inc. For institutional investors, KKR will offer wider access to its funds.

Separately, the 2022 restructuring of Marelli Holdings Co., a Japanese auto-parts supplier owned by KKR cost the firm the $2 billion it invested in the company. Banks which had lent to Marelli lost a total of 450 billion yen.

Advertisement

KKR has put in another $650 million to fund Marelli’s restructuring and the firm is now profitable, according to Hirano.

Photograph: Morning commuters cross a street outside Tokyo Station in Tokyo, Japan, on Monday, Aug. 21, 2023. Photo credit: Shoko Takayasu/Bloomberg

Advertisement

Copyright 2024 Bloomberg.

Topics
Japan

Advertisement

The most important insurance news,in your inbox every business day.

Get the insurance industry’s trusted newsletter

Advertisement
Advertisement
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *