KKR to refund $350m to investors over underperforming Asia fund

KKR & Co. will refund US$350 million to investors in its second Asia private equity fund due to underperformance.

The firm, based in the US, will take a charge in Q4 for the US$350 million in gross carry previously received from the fund, which started investing in 2013.

KKR shares dropped as much as 6% following the announcement, before recovering slightly, trading 2% lower at US$116.72 in New York on Friday morning.

Chief financial officer Rob Lewin told analysts the fund is expected to roughly return its cost to investors.

He added that KKR’s third and fourth Asia funds are performing in the top quartile, with the third fund having already returned all of its capital.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

KKR Asian Fund II will return US$350 million of carry (manager’s performance fees), a sizable sum vs the firm’s fourth Asia fund that closed at US$15 billion in 2021 1.
The timing lines up with a wider Asia-Pacific PE slump, as the region’s share of global fundraising fell from 18.2% in 2018 to 4% in H1 2025 1.
CFO Rob Lewin expects Fund II to roughly return its cost, about 1.0x, far behind the first Asia infrastructure fund at 10.66% IRR and the second at 18.6% IRR as of 31 December 2024 2.
Funds III and IV rank top quartile, with Fund III returning all capital, while the 2013 fund faced a China slowdown.

LPs with 2012-2015 Asia PE exposure should audit carry accruals plus distribution waterfalls (rules for splitting cash between investors vs the manager). KKR’s clawback hints that interim marks may lag reality 1.
Administrators plus accounting platforms serving Asia-focused GPs will see demand for clawback modeling and waterfall tools as more funds hit years 10 to 12 without distributions.
Asia-Pacific PE rebounded in 2014 with exits of US$111 billion, while average deal multiples rose to 15.3x EBITDA (earnings before interest, taxes, depreciation, and amortization), 21% above 2013 3.
Secondary specialists (firms that buy and sell existing LP stakes in funds) can target stressed Fund II-era positions. Many LPs face long holds with thin distributions, so some will take discounts given the gap between KKR’s second fund at about 1.0x and its third with full capital returned.