KKR says China’s consumer sectors a ‘sweet spot’ for investors

From pet food to liquor and lighting fixtures, global investing firm KKR is putting its money behind a suite of consumer-driven sectors in China, departing from a singular focus on technology.

“We have around $6 billion invested in China. And our core focus has really been around the sweet spot of what we think the market opportunity is — domestic consumption,” KKR’s co-CEO Joseph Bae told CNBC’s “Squawk Box Asia.”

The company is intending to capitalize and cater to the growing middle class of 400 million people in China as they pursue higher quality food and services. KKR also has an active presence in different parts of China, with offices in capital Beijing, Shanghai and Hong Kong.

“We’ve invested in companies like the largest pet food company in China, the largest lighting fixtures company in China, retail pharmacy chains in China, domestic liquor and alcohol brands in China… All consumer driven,” Bae elaborated.

Last month, China’s State Council proposed measures to boost the consumption of household products, without going into details. China has also recently reported a slew of weaker-than-expected economic data, pointing to fizzling growth momentum and intensifying calls for more stimulus.

Bae added that the firm’s focus has not been around some of the “sensitive areas in technology” — such as semiconductors, A.I. and supercomputing.

Last week, China has imposed export curbs of two metals key to the manufacturing of semiconductors, in a warning to the U.S. and Europe in their escalating technological trade war over access to microchips.

Bae also cautioned that the geopolitical complexity between China and U.S. has increased dramatically, and called for more prudency in how investment in China should be done despite the competition between the economic superpowers.

The investment company’s assets under management is over $500 billion today, with its current fund in Asia boasting $15 billion.

“We’re not only in private equity, we’re in growth equity. We’re the largest investor in infrastructure in Asia today,” Bae said, adding that KKR has a private credit fund and platform in the region as well.