Asian Private Equity Diversifies Away From Growth Equity Focused Strategies

As the Asian private equity market matures, it is increasingly mirroring the diversity of fund strategies seen in North America and Europe.

Despite the prominence of growth equity investment in Asia, other strategies, particularly buyout, have an increasing presence in the region, according to research firm Preqin.

Six Asia-focused buyout funds have closed in 2013 so far, raising an aggregate US$10.3 billion, already significantly surpassing the US$6.9 billion raised by the 12 Asia-focused buyout vehicles that closed in all of 2012.

This has driven a significant rise in the average fund size of Asia-focused private equity vehicles, from US$256 million in 2012 to US$422 million for funds closed in 2013 so far.

There are currently 36 Asia-focused buyout funds in market, an increase from the 29 in
market at the same time in 2012. The aggregate capital targeted by these funds has remained relatively stable at US$30 billion.

In contrast, the aggregate capital targeted by Asia-focused growth vehicles has dropped from US$36 billion in August 2012 to US$34 billion in September 2013.

Asia-based investors demonstrate an increasing preference for a greater diversity of fund types as well. About 44% of Asia-based investors interviewed by Preqin named small to mid-market buyout funds as presenting the best private equity investment opportunities globally, compared to 25% in August 2012.

About 26% of Asia-based investors named large to mega buyout as presenting the best private equity opportunities currently, an increase compared to 9% in August 2012.

Investor interest in growth equity has fallen from 54% of investors interviewed naming the strategy as presenting the best opportunities in August 2012 to 30% in August 2013.

China Expert network