KKR's Agrawal calls industrial infra 'next big thing' in asset class

By Allison McNeely

KKR & Co.’s global infrastructure head said the “next big thing” in the asset class is industrial assets such as storage facilities and logistics.
 

Fortune 500 companies have a large amount of industrial assets they need for production but don’t have to own, and they could sell these assets to shore up their balance sheets, Raj Agrawal said in an interview Monday at the Barclays Global Financial Services Conference.
 

“That’s a really high-growth area going forward,” he said. 
 

Data centers and logistics have been big plays for alternative asset managers in real estate and infrastructure as they look to capitalize on long-term trends toward widespread high-speed internet adoption and the transition from fossil fuels to renewable energy. KKR estimates that there’s a need for $100 trillion in infrastructure investment through 2040.
 

KKR has ramped up its deployment by pursuing deals in digital infrastructure, including fiber connectivity and data centers, as well as energy transition, Agrawal said. In the past 12 months, the firm has invested about $8 billion of equity in infrastructure.
 

In three years, KKR’s infrastructure business has gone from less than $40 billion of assets under management to about $75 billion, according to Agrawal.
 

The firm is looking to wealthy individuals as a source of capital because they’re underallocated to alternatives — particularly infrastructure, he added.