As 2026 approaches, private equity major KKR said it wants to “own more Asia”, underpinned by ongoing corporate reforms and the region’s secular consumption expansion.
“The good news is that investors, especially on the private side, are now generally underweight this region, including equities, infrastructure, and credit,” Henry McVey, Head of Global Macro & Asset Allocation, CIO of KKR Balance Sheet, said in the firm’s global outlook report released on Thursday.
Beyond sentiment, KKR is backing its conviction with active fundraising for its Asia strategy. It is reportedly seeking $15 billion for a new Asia buyout vehicle, a similar size to its fourth regional fund. It had gathered $3 billion for the third pan-Asia infrastructure fund as of Q3 2025, and was said to be near a final close of its $2-billion Asia private credit fund.
Corporate reforms in North Asia
KKR sees increasing opportunities for corporate carve-outs across Asia, with Japan and South Korea standing out as key markets.
In Japan, heightened global attention on the country’s private capital landscape reflects a shift among domestic corporates toward improving capital efficiency and enhancing shareholder returns. These changes are opening up a sizeable pipeline of potential investments across carve-outs and take-private.
Negative real rates continue to provide strong support by reducing funding costs and incentivising companies to put excess cash into higher-return projects. “Together with Japan’s ongoing investment cycle in AI, semiconductors, clean energy, and advanced manufacturing, these shifts represent one of the most meaningful structural transformations in developed markets in recent years—carrying significant implications for portfolio construction and long-term return generation as Japan transitions towards a more productive, investment-led growth regime,” McVey wrote.
Meanwhile, in Korea, corporate reforms and shareholder activism lifted market performance by more than 50% so far in 2025. However, 70% of the market still trades below book value, compared to 40% in Japan and less than seven percent in the US. “We think further corporate carve-outs are coming as companies seek to better optimise their footprints,” he noted.
KKR also sees scope for corporate restructuring in China, where asset valuations remain cheap. The dividend and buyback yield in China also exceeded the 10-year government bond yield by 1.5-2%, the firm added.
However, in McVey’s viewpoint, China needs to develop its domestic services industry to inspire job growth and an exit from deflation. KKR revised China’s GDP growth from 4.1% to 4.6% for 2026 and 4.4% for 2027.
This year, KKR has completed such deals as the privatisation of Fuji Soft and Topcon in Japan, and the acquisition of SK Group’s waste and water treatment business in Korea.
South Asia’s consumption appeal
While KKR sees the consumption-upgrade cycle as one of the most powerful long-term forces in Asia, the trend is most pronounced in India and Southeast Asia.
The firm expects India’s affluent population to increase nearly tenfold between 2010 and 2028, with incremental income increasingly channelled to education and healthcare, two sectors where KKR has built significant and expanding exposure.
Similar durable growth dynamics are evident in Southeast Asia, where private healthcare and education have also generated compelling opportunities. KKR’s investments in these two sectors include India’s JB Pharmaceuticals, Metro Pacific Hospital in the Philippines, and Vietnam-based education group EQuest.
There are also capital deployment opportunities across financial inclusion and digital enablement, and the modernisation of retail and e-commerce infrastructure, as the firm pointed out.
In addition, intra-Asia trade has emerged as a strong driver to propel the region’s power as global trade decouples. While the aforementioned consumer base acts as the underlying driving force, governments across the region are prioritising trade facilitation and infrastructure connectivity, where private capital can play an important role in anchoring this shift and supporting sustained intraregional growth.
KKR cited data that only 46% of Asian trade was conducted within the region by 1990, compared to 60% in 2024. The firm expects it to grow by another 8% over the next few years.
“This is a scalable, secular trend with real investment potential that spans logistics, manufacturing, consumer markets, and digital enablement. We think Infrastructure and Credit—both liquid and private — also offer compelling ways to capitalise on this ongoing regional shift,” the firm said.
