April 14 (Reuters) - U.S. private equity firm KKR on Monday said it had appointed David Petraeus as the chairman of its Middle East business, and has set up an investment team in the region that will focus on opportunities in the Gulf.

The move follows other private equity group setting up base in the region or strengthening their presence as local governments implement ambitious investment programs to diversify their economies away from oil.

"We view the Middle East as an increasingly important destination for investment, with structural reforms, pro-investment policies, and favorable demographic trends accelerating economic growth," said KKR's co-CEOs Joe Bae and Scott Nuttall.

BlackRock ( BLK )-owned GIP last month became one of the latest private equity groups to set up base in the Gulf and invest in local businesses in a region that had been where buyout groups went to raise money to invest in other markets.

Permira said in February it would open an office in the Gulf's traditional financial hub, Dubai, while New York-based General Atlantic opened an office in Abu Dhabi last year. Both are in the United Arab Emirates.

KKR, one of the world's largest alternative asset managers, has set a target of surpassing $1 trillion in assets in the next five years.

The company, which has offices in Dubai and in Saudi Arabia's capital Riyadh, said on Monday the regional investment team will be led by Julian Barratt-Due and will look for investment and partnership opportunities in the region, with a focus on GCC countries.

Earlier this year, KKR said it was committing together with Dubai-based data firm Global Data Hub to invest more than $5 billion to build-out data center capacity.

Petraeus, a former CIA director, also served as the top U.S. commander in the wars in Iraq and Afghanistan. He resigned from his CIA position in 2012 after an

extramarital affair

. (Reporting by Ojasvi Gupta in Bengaluru; Editing by Varun H K)