Asia-Pacific Private Equity

Joseph Y. Bae

KKR Asia Today

Leading
Pan-Asian
Platform
Pan-Asian
Pool of
Capital

First office established in 2005; today, dedicated local

teams spanning 6 regional offices in Hong Kong, Tokyo,
Sydney, Beijing, Mumbai and Seoul

93 executives across Asia, 46 in private equity, senior PE

team with 14+ years of experience and minimal turnover

Strong &
Consistent
Portfolio

Multifaceted
Capabilities
(1)

2
Note:

$4.0bn Asian Fund raised in 2007, ~70% already

invested/committed today in Greater China, Southeast
Asia, India, Korea, Japan and Australia
$1.0bn China Growth Fund raised in 2011, ~37%
invested/committed today
Completed/committed 26 investments since 2005
Invested and committed ~$4.7bn of equity across 7
countries in both control and minority deals
1.9x gross MOIC (1.8x net MOIC), 22% composite
gross IRR (19% composite net IRR) across all Asian
investments(1)

Global expertise delivered with local resources

Demonstrated experience in operational value

creation, capital markets, and stakeholder
management, plus senior advisors

Return information as of March 31, 2012. All Asian investment returns presented are net of transaction costs and performance fees, but gross of management fees. Management fees are imposed at the fund or account level,
and have not been allocated to each individual investment for purposes of this presentation. After payment of management fees at the fund or account level, the actual return to investors with respect to these investments was
less than indicated above. The specific companies included in the returns are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund
and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable. Includes all investments made in Asia beginning with the
investment in Avago in 2005 across all of our private equity funds, including European I (2000 vintage), Millennium (2002 vintage), European II (2005 vintage), 2006 Fund (2006 vintage), Asian Fund (2007 vintage) and China
Growth Fund (2010 vintage). Past performance is no guarantee of future results. See Important Information for how our performance is calculated.

As of May 2012, unless otherwise indicated. Senior team indicates Private Equity Members, Managing Directors, Directors and Principals.

Timeline of KKR Asia

Hong Kong office opens;
KKR Asia begins operations

Mumbai office opens

Sydney office opens

$1.0 billion KKR

China Growth Fund
is raised

2005

2006

2007

2008

2009

$4.0 billion
KKR Asian Fund
is raised
Tokyo office opens

2010

2011

Further buildout of KKR

Capstone,
KCM and CPG
Seoul office opens

Beijing office opens; KKR

Capstone, CPG & KCM begin in
Asia

KKR Asia Teams Build-out

Private Equity

Senior Advisors / Industry Advisors

KKR Capstone Asia

Finance / HR / IT

Client & Partner Group

Legal / Compliance

KCM / KAM

Public Affairs

92

93

2011

2012

77
+73% CAGR

61

43
27
16

3 Note:

2005
As of May 2012.

2006

2007

2008

2009

2010

Strong Regional Presence Covering Six Core Markets in Asia

Experienced local investment teams with strong track
records are integrated with KKRs global industry teams
46 private equity investment
professionals in region
93 executives in Asia in total,
spanning all KKR and KKR Capstone
functions
Hong Kong (Generalists)
10 KKR Capstone
5 Client & Partner Group*
3 KKR Capital Markets*
2 Legal & Compliance
1 Public Affairs
1 Finance
1 Human Resource

Greater China

Korea

Japan

16 Private Equity
7 KKR Capstone Capable(1)
2 Client & Partner Group
3 Senior Advisors

4 Private Equity
Regional Capstone Coverage

6 Private Equity
2 KKR Capstone(2)
2 Client & Partner Group
3 Senior Advisors

India

Southeast Asia

Australia

8 Private Equity
2 KKR Capstone Capable(3)
5 KKR Capital Markets
2 Senior Advisors
1 Finance

7 Private Equity
Regional Capstone Coverage
1 Senior Advisor

5 Private Equity
1 KKR Capstone + Regional
Capstone Coverage
1 Senior Advisor

Note:
(1)
(2)
(3)

As of May 2012. Asterisk (*) denotes Rex Chung and Stanley Ho are included in both KCM and CPG headcounts.
3 located in Greater China and 4 in Hong Kong with Chinese language capability.
1 located in Tokyo and 1 in Hong Kong with Japanese language capability.
1 located in India and 1 expected to be relocated from Hong Kong.

Differentiated Approach to Asia

A Collection of Attributes Differentiates Us

KKRs global resources + Asia teams local approach
= High quality franchise
Deep Investment
Experience

Alignment of
Interest with
Our LPs

One-Firm
with Global
Reach

Dedicated
Local Teams

People
& Culture

Pan-Asian,
Flexible
Investment
Approach

KKR Capital
Markets
Value Creation
Through
KKR Capstone
6

Differentiated
Proprietary
Sourcing

Deep Investment Experience

Strong Pan-Asian Investment Platform

China

Korea

Target domestic consumption driven

businesses with long term growth
potential

Large and stable economy creates opportunity

to pursue larger LBOs, minority investments
and corporate partnerships

Flexible on transaction structure,

ownership % and corporate type

KKR invested/committed $361mm in 1

transaction in 2009

KKR invested/committed
$1,387mm in 12 transactions
since 2007

Japan
India
Proprietary deal sourcing through active
dialogue with key promoters
Utilizing creative, flexible investment
structures, including minority/public
equity transactions
KKR invested/committed $998mm
in 6 transactions since 2006

Focus on industry leaders with

operational excellence but underutilized in the global competition
Target both traditional LBO and nontraditional investments
KKR invested/committed
$107mm in 1 transaction in
2010(1)

Australia
Southeast Asia

Mature economy ripe for larger sized,

buyout transactions

Singapore: mature PE market with scalable

companies and buyout opportunities

Fully utilize global resources and

operational improvement capabilities

Strong domestic consumption and growth

present further opportunities in Vietnam,
Indonesia and Malaysia

KKR invested/committed $692mm

in 2 transactions since 2006

KKR invested/committed $1,112mm since

2005 in 4 transactions

7
Note:
(1)

As of May 2012. Unless indicated, the above reflects current market views, opinions and expectations of KKR based on its historic experience and proprietary research.
Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment which may differ materially, and
should not be relied upon as such. There can be no assurance that investors in any account, or fund or other vehicle will receive a return of capital.
Original Intelligence buyout of $242mm; represents post-equity bridge return amount only.

Differentiated Proprietary Sourcing

Proprietary Investment Sourcing Process

Proactive outreach, strong reputation and relationships, focused local networks,
and resources valued by management teams and entrepreneurs yield investments
not available to others

Auction 8%

Auction

BIS
Oriental Brewery

Limited Process

8%

31%

62%
Proprietary
Proprietary 62%

Limited Process 31%

Aricent
Avago
Bharti Infratel
CICC
Intelligence
Magma Fincorp
MMI
Unisteel

Coffee Day
China Chord Blood
China Outfitters
Dalmia Cement
Far East Horizon
Masan Consumer
Modern Dairy
Novo Holdco Limited

Rundong Automobile
Seven West Media
Sino Prosperity RE
Tianrui Cement
TVS Logistics
United Envirotech
VATS Liquor
Yageo

8
Note:

Data in the chart above reflects all private equity investments announced or completed in Asia through May 2012; percentages based on number of transactions. Limited process is defined
as a sourcing process involving three or fewer interested parties, including KKR. Sourcing allocation for Asian Fund II may differ.

Differentiated Proprietary Sourcing

Patient and Selective Investing through our Proprietary Pipeline

We have reviewed a large number of investment opportunities, the
majority of which were proprietary or limited processes
~350: Asian private equity opportunities
that KKR Asia deal teams spent significant
time evaluating from 2010 to YTD 2012

~60: Discrete new private

equity opportunities
discussed with the
Investment Committee(1)

15: Investments
Committed
or Closed(2)

Note:
(1)
(2)

100% of the investments

announced or closed were
proprietary or limited process
transactions

Data represents Asia based private equity deal flow for the period January 2010 to March 2012; includes a small number of opportunities related to existing KKR portfolio companies.
Most investments are presented to the Investment Committee numerous times throughout the diligence process, however this count includes each unique investment opportunity once and
does not include subsequent presentations.
Includes transactions/commitments announced for the period January 2010 to March 2012 (Coffee Day, Dalmia Cement, Intelligence, BIS, CICC, Rundong Automobile, VATS Liquor, Masan
Consumer, Magma Fincorp, United Envirotech, Sino Prosperity, China Outfitters and Novo Holdco Limited). Also includes deals announced in April 2012 (China Chord Blood and TVS
Logistics). Does not include all follow-on investments.

Pan-Asian, Flexible Investment

Approach

Well Diversified Portfolio of Asian Investments(1)

By Geography
by Remaining Value

Vietnam
Japan 3%
6%
Australia
10%

Greater China
27%

10

Retail
Telecom 4%
4% Real Estate
Media
1%
5%
Services
6%

by Remaining Value

Non-Control
37%
Technology
30%

Manufacturing
7%

India
17%

(2)

By Structure(2)

by Remaining Value

Recycling
7%

South Korea
17%

Note:
(1)

By Industry

Singapore
20%

Financial Services
11%

Control
63%
Consumer Products
25%

Data as of March 31, 2012.

All Asian investments include those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund and
headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable. Includes all
investments made in Asia beginning with the investment in Avago in 2005 across all of our private equity funds, including European I (2000 vintage), Millennium (2002 vintage), European
II (2005 vintage), 2006 Fund (2006 vintage), Asian Fund (2007 vintage) and China Growth Fund (2010 vintage). Diversification of Asian Fund II investments may differ.
Control transaction indicates buyout or JV transactions where KKR, along with other financial investors if applicable, collectively held equity ownership of 50% or more. Non-control
indicates growth or minority investments.

Pan-Asian, Flexible Investment

Approach

Investing Thematically
Across Control Oriented and Minority Stake Transactions

Domestic
Consumption

#1

Domestic consumption
plays in emerging growth
markets
Modern
Dairy

#2

#3

Financial Services
Corporate and consumer
population whose banking
needs are not met and lack
of direct access to lending

Infrastructure
Development
Support urbanization
trends and sustainable
economic growth
Bharti
Infratel

Novo Holdco
Limited

Sino Prosperity
RE Fund JV

#4

Specialized Tech &

Manufacturing
Outsourced R&D and
manufacturing capability
for specialized precision
engineering

#5

Large-Scale Corporate
Carve-outs
Complicated operational
carve-outs creating
industry leading businesses

11
Note:

As of May 2012. The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored
private equity fund and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.

Investing by Country and Structure:

Traditional Buyouts
Australia
Australian provider of
materials and logistics
services to the mining
sector
Australian multifaceted
media group with
television, magazine
publishing and online
business lines

Korea
South Koreas largest
beer company

Japan
Comprehensive
recruitment services
provider

Pan-Asian, Flexible Investment

Approach

Singapore
Designer, developer,
and global supplier
of fabless semiconductors

Precision engineering
manufacturer of
HDD, non-HDD, and
capital equipment

Global provider of
high-precision
components

India
Communications
industry software
solutions provider

12
Note:

The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund
and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.

Investing by Country and Structure:

Growth and Minority

Pan-Asian, Flexible Investment

Approach

China

India

Leading investment bank

Market-leading SME financing
company
Modern
Dairy

Dairy group operating largescale dairy farms

Strong regional cement
producer
Leading regional auto
dealership
Leading high-end liquor store
chain operator
Leading water treatment and
recycling solution provider

Sino Prosperity
RE Fund JV

JV platform with a leading real

estate developer
Leading apparel design,
manufacturing and sales

Novo Holdco
Limited

13
Note:

Fast-growing fashion apparel

retailer
Chinas leading cord blood
banking operator

Bharti
Infratel

Leading global independent

telecom tower company

Leading food and beverage

retailer
Leading private cement
company
Indias fastest growing publicly
listed non-bank finance
company
Leading third-party logistics
company

Taiwan
High quality passive
component provider

Vietnam
Vietnams largest local
packaged food company

The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund
and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.

Asian Portfolio Performance

14

Strong Asian Portfolio Performance

All Asian Investments Performance
Revenue

EBITDA

US$ in millions

US$ in millions

+15%

12,408

+19%

14,618

+29%
12,727

4,042

+44%
3,377

3,396

9,590
2,340

CY 2009 CY 2010
Note:

15

CY 2010 CY 2011

CY 2009 CY 2010

CY 2010 CY 2011

As of December 31, 2011. For CICC, Operating Profit is used as a proxy for EBITDA. For Far East, pre-provision operating profit is used as a proxy for EBITDA. For Magma, Net Operating
Income and Net Income are used as a proxy for Revenue and EBITDA, respectively.
For CY2009 vs. CY2010 comparison: Excludes businesses invested in 2011 (Masan Consumer, Magma Fincorp, Sino Prosperity, UEL, China Outfitters). Dalmia also excluded given financials
for 2009 were not available due to its financial restructuring.
For CY2010 vs. CY2011 comparison: Excludes China Outfitters which was made in December 2011. For Tianrui, Far East, and Modern Dairy, 2011 vs. 2010 CY data is as of LTM ended June
30, the latest publicly available financials. For Avago, 2011 vs. 2010 CY data is as of LTM ended July 31. Coffee Day excluded given financial restructuring in 2010, which is incomparable to
2011 results.

The specific companies included are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund and
headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies included was or will be profitable. Figures converted to US$ using spot
exchange rate as at the end of the period.

Asian Investment Realizations in 2010 - YTD 2012

KKRs Asian investments have distributed or have announced
distributions of ~$2.3bn in 2010 - YTD 2012
IPO
Avago

Secondary

Strategic
Sale

Refinancing

$1,532

Aricent

Far East
Horizon(1)

Distribution
($mm)

$73
N/A

Intelligence(2)

$135

MMI(2)

$27

Modern Dairy

Tianrui
Cement(3)

Seven West
Media(4)

$79

$79

$404

2012 Outlook includes additional potential realizations through

IPOs & secondaries and strategic stake sales
Note: As of March 31, 2012, unless otherwise noted. The specific companies identified are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned
by a KKR-sponsored private equity fund and headquartered, incorporated or have significant operations in Asia.
(1)
No distribution was made following the Far East Horizon IPO as the Company only issued primary shares.
(2)
Represents return of equity bridge investment.
(3)
Partial sale. Completed in 2010; IPO on HK Stock Exchange in December 2011, though no distributions made following IPO as the Company only issued primary shares.
(4)
Represents cash portion distributed from the sale of Seven Media Group to West Australian Newspaper Holdings Ltd.

16

All Asian Composite Returns vs. Market Indices

As of March 31, 2012
30.0%

25.0%

20.0%

All Asian Composite

Outperformance
(On Net Return)

All Asian
Composite Gross
21.8%

All Asian
Composite Net(1)
19.1%

MSCI Asia
Pacific(2)
15.7%

15.0%

10.0%

5.0%

S&P 500(2)
12.5%

S&P 500(2)
6.6%
MSCI Asia Pacific(2)
3.4%

0.0%
Note: The companies included are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored private equity fund and
headquartered, incorporated or have significant operations in Asia. Includes all investments made in Asia beginning with the investment in Avago in 2005 across all of our private equity funds,
including European I (2000 vintage), Millennium (2002 vintage), European II (2005 vintage), 2006 Fund (2006 vintage), Asian Fund (2007 vintage) and China Growth Fund (2010 vintage). The
IRRs are calculated using the actual date of the cash flow(s) and the unrealized value as of the valuation date. Past performance is no guarantee of future returns.
(1)
The net returns presented are net of transaction costs and performance fees, but gross of management fees. Management fees are imposed at the fund or account level, and have not been
allocated to each individual investment for purposes of this presentation. After payment of management fees at the fund or account level, the actual net return to investors with respect to
these investments was less than indicated above.
(2)
Market indices for S&P 500 and MSCI Asia Pacific include dividends reinvested. The market index returns assume that on the day a portfolio investment is made, a hypothetical investment in a
matching amount is made in the given index. For each date on which either a portion or all of the portfolio investment is sold, a hypothetical index multiple (factor) is calculated by comparing
the change in index value between the two dates. The cost of the investment sold (or portion of cost sold) is multiplied by this factor, resulting in a hypothetical index value. The return is
calculated using these dates of investment and hypothetical value(s) generated. See Important Information for additional details.

17

Summary

18

KKR Asia Summary

Significant
Platform
Build-Out
Established a
leading Asian
investment
platform
6 offices across
Asia with 90+
professionals,
spanning all
KKR functions

Note:

(1)
(2)

19

Strong
Asian Portfolio
Performance

Accelerating
Investments/
Distributions

Positive
Outlook for
the Region

Invested
~$4.7bn of
equity across 7
countries, over
10 industries in
both control and
minority deals(1)

Invested $1.6bn
in Asia during
2010 to YTD
2012(1)

Strong growth
expected driven
by emerging
economies

Returned
~$2.3bn in
2010 to YTD
2012(1)

Robust pipeline
of new
investment
opportunities

1.9x gross MOIC

(1.8x net
MOIC), across
all Asian
investments(2)

Past performance is no guarantee of future results. See Important Information for how our performance is calculated. Unless indicated, the above reflects current market views, opinions
and expectations of KKR based on its historic experience and proprietary research. Historic market trends are not reliable indicators of actual future market behavior or future performance
of any particular investment which may differ materially, and should not be relied upon as such. There can be no assurance that investors in any account, or fund or other vehicle will receive
a return of capital. The returns presented are net of transaction costs and performance fees, but gross of management fees. Management fees are imposed at the fund or account level, and
have not been allocated to each individual investment for purposes of this presentation. After payment of management fees at the fund or account level, the actual return to investors with
respect to these investments was less than indicated above.
As of May 2012.
As of March 31, 2012, The specific companies included are those that are either (i) currently owned by a KKR-sponsored Asia focused private equity fund or (ii) owned by a KKR-sponsored
private equity fund and headquartered, incorporated or have significant operations in Asia. It should not be assumed that an investment in the companies identified was or will be profitable.
Includes all investments made in Asia beginning with the investment in Avago in 2005 across all of our private equity funds, including European I (2000 vintage), Millennium (2002 vintage),
European II (2005 vintage), 2006 Fund (2006 vintage), Asian Fund (2007 vintage) and China Growth Fund (2010 vintage).