Asian Private Equity Market Shows Signs Of Maturity – Preqin

By Mani
Updated on

Asian private equity market is increasingly replicating the diversity of fund strategy witnessed in North America and Europe.

According to Preqin’s latest research other strategies, particularly buyouts, have shown increasing presence in the Asian private equity market.

Strong Start In 2013

Preqin’s latest research reveals six Asia-focused buyout funds have closed in 2013 so far, raising an aggregate $10.3 billion, thereby significantly surpassing the $6.9 billion raised by the 12 Asia-focused buyout vehicles that closed during the whole of last year.

The strong start in Asia is evidenced from the fact that the average fund size of Asia-focused private equity vehicles has increased significantly from $256 million in 2012 to $422 million for funds closed in 2013 so far.

Enhanced Level Of Activity

From a short-term perspective, 37 percent of Asia-based investors interviewed by Preqin are planning to commit more capital to private equity funds in 2014 than they will have in 2013.

Seventy-one percent of investors interviewed by Preqin have committed to at least one private equity fund so far in 2013. Talking about their long-term private equity allocations during the next three to five years, 53 percent expressed their inclination to enhance their private equity allocations, as a proportion of their total assets under management.

Penchant For Small-To-Mid-Market Buyout Funds

The respondents felt that the best opportunities for private equity investment in the current climate would germinate from small-to-mid-market buyout funds. This is evidenced from the fact that 44 percent of the investors that Preqin interviewed expressed penchant for these fund types.

As seen in the following diagram, the respondents have also named growth, large to mega buyouts and venture capital funds as attractive with 30 percent, 26 percent and 18 percent of investors respectively showing preference for such funds.

Private Equity Market

Asia Remains The Best Bet for private equity investment

60 percent of Asia-based private equity investors interviewed by Preqin felt that Asia offers the best opportunities for private equity investment, in the current climate. However, 40 percent and 33 percent of respondents have also shown interest in the U.S. and Europe private equity market respectively, strengthening the view that the Asian private equity investors are looking for sophistication by looking further to gain sizeable private equity returns and to diversify their investment portfolio.

Preqin’s report also notes with challenges remaining in the global economy, and with Asia-based investors in private equity becoming more sophisticated, more optimistic and freer to invest, one can anticipate capital from Asia to play an increasingly significant role in funding private equity on a global level.

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