KKR is aiming to close its second Asia-focused private credit fund in December as the firm expands its lending footprint across the region.

The vehicle, the Asia Credit Opportunities Fund II, is targeting around $2bn and focuses on performing credit opportunities with expected returns in the low-to-mid-teens.

The fund began raising capital in January 2024 and builds on KKR’s first Asia Pacific credit fund, which closed at $1.1bn in 2022 with more than half of its commitments coming from Asia.

The latest fundraise reflects growing investor demand for private credit in Asia, which remains a small but rapidly expanding part of the global $1.7tn private debt market. Industry forecasts suggest the Asia Pacific private credit segment could rise from $59bn in 2024 to $92bn by 2027 as institutional and wealth clients seek yield and diversification.

Despite strong growth, private credit firms continue to face competition from traditional lenders, as Asian borrowers remain highly price-sensitive and bank financing is typically 200 to 400 basis points cheaper. Banks also offer broader services, including cash management and revolving credit, which private credit funds cannot easily replicate.

KKR manages $315bn in credit assets globally and has recently deepened its presence in Asia by hiring a private credit specialist in Japan and deploying capital into deals in Australia and India.

KKR declined to comment on the fundraising plans.

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