Private equity giant <span style='color:red'>KKR</span> sees 'significant' opportunity for 'outsized' returns in China amid trade war
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Private equity giant KKR sees 'significant' opportunity for 'outsized' returns in China amid trade war

Executives at private equity giant KKR recently visited China and came away believing that a powerful investing opportunity awaits, due in significant part to the ongoing trade war.China already has been trying to adapt from an export-based economy to one powered by consumers, particularly the burgeoning millennial crowd and its appetite for the latest technological gadgets and apparel trends. The process, though, has been slow and questions have been raised about whether the nation can maintain its long tradition of being among the world's growth leaders.That's about to change, according to an analysis by Henry McVey, KKR's head of global macro and asset allocation. The firm manages $148.5 billion and was ranked second in the world for 2017 in funds raised among its peers, according to Private Equity International.McVey and his fellow executives saw a nation in transition, pushed most recently by the Trump administration's move to levy billions in tariffs against Chinese imports."Overall, we believe that the current trade wars with the United States will only accelerate China's shift away from an export economy dependent on global trade/flows towards a more self-reliant consumer services economy that is gaining prominence, particularly within Asia," he wrote.Consumers purchasing Xiaomi products at its flagship store in Hong Kong. "No doubt, this transition will take time, and it will likely be complicated in the near term by the political agendas of both the East and the West," McVey added. "However, the long-term trends of the Chinese millennials helping to accelerate the transition of the nation towards more of a domestically focused, services-based economy with increasing technological advancements is undeniable."For investors, that will mean "a significant long-term opportunity" despite the trade tensions, amid a need "to help fund this transition and receive potentially outsized returns along the way."At an industry level, KKR sees technology and agriculture as being the main areas of interest. Semiconductors and soybeans have been key impacted areas during the ongoing trade battles, and are thus positioned best to provide a chance to capitalize, according to the analysis.On a macroeconomic level, the surging millennial population is setting up as a big difference-maker.The demographic numbers 828 million strong in China, compared to just 66 million in the U.S. They're heavily influenced by online shopping sites, which in turn will drive the nation's economic future, McVey wrote."The power of Baidu, Alibaba, and Tencent (BAT) to decide which companies succeed or fail in China's vast consumer and corporate markets has become both outsized and unprecedented," he said."Indeed, by being part of the BAT network and infrastructure, several of the companies we met with in the healthy foods, data center, and logistics businesses are quickly emerging as almost preordained winners, often at the expense of incumbent companies in the more traditional consumer categories (many of which are multinational players)."The change is "secular, not cyclical, and it has critical implications for return on capital in the Chinese corporate sector," McVey added.The enthusiasm did come with a note of caution: Growth in China has been uneven across sectors, with financials serving as a counterweight to otherwise strong performance. McVey said crosscurrents in both domestic and international policies can "materially enhance or diminish the investment thesis.
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Release time：2018-08-13 00:00 reading：1152 Continue reading>>
<span style='color:red'>KKR</span>, INCJ Team For New Toshiba Bid
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KKR, INCJ Team For New Toshiba Bid

　　The U.S. private equity fund KKR will be partnering with a Japanese public-private fund – Innovation Network Corp. of Japan (INCJ) – to bid jointly for Toshiba’s memory unit, Japan’s economic newspaper Nikkei reported Friday.　　The newly surfaced bid can be interpreted as a last-ditch effort by Japan to save, and potentially hang onto, Toshiba’s flash memory business -- the pride of the nation’s engineering community.　　The KKR-INCJ team is expected to participate in a second bidding round in May after performing due diligence on Toshiba Memory. Nikkei reported that “Toshiba’s partner Western Digital and the state-backed Development Bank of Japan may join in as well.” The amount of the bid remains to be worked out, the newspaper said.　　Toshiba plans to choose a winner before its general shareholders meeting in late June.　　Nicky Lu, Chairman, CEO & Founder, Etron Technology, Inc., said in an interview with EE Times here Friday, “The Japanese government must save Toshiba’s NAND business. It is Japan’s crown jewel.” Although he has no direct knowledge of business current negotiations surrounding Toshiba in Japan, Lu, a technologist, is a keen observer of semiconductor technology and industry. He remarked, “It is Toshiba who invented NAND flash. I can’t believe the Japanese government would let it go.”　　Lu, who served as Chairman of the Taiwan Semiconductor Industry Association until earlier this year, is currently Executive Board Director of the organization.　　Media speculation about potential bidders ranges from Western Digital and Broadcom to SK Hynix and Hon Hai. The KKR-INCJ bid is likely the one Japanese government officials have been waiting for.　　Nikkei noted that acquisition by the KKR-INCJ team would let Western Digital’s joint venture with Toshiba continue. The newspaper further speculated that “Western Digital is sounding out KKR about a partnership and could join the consortium if the terms are right.”　　Japanese government officials and industry observers appear to be rationalizing the newly surfaced US-Japan bid for Toshiba as a way to avoid potentially lengthy antitrust reviews, if Western Digital bought Toshiba Memory outright. It would also reduce the risk of “running afoul of laws restricting investments in Japanese companies that relate to national security.”
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Release time：2017-04-24 00:00 reading：1043 Continue reading>>

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