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Asia-Pacific Hedge Fund Fundraising Opportunities for Emerging Managers – December 2012

In comparison to the more mature regions of Europe and North America, Asia’s hedge fund industry is still developing. Major economic powerhouses in the region, such as Korea, India and China have only recently taken steps to encourage the operation of domestic hedge fund managers, and as such it is important for the numerous emerging or spin-off hedge fund managers in Asia to better understand where capital is likely to come from in the institutional marketplace.

Preqin’s Hedge Fund Investor Profiles database shows that 59.8% of institutional investors located in Asia-Pacific will invest in, or will consider investing in, emerging manages. For spin-off managers, this figure dips slightly to 57.4%, while 36.2% of Asia-Pacific based investors will also either seed or consider seeding new hedge funds. These numbers indicate that Asia-Pacific investors are slightly more open to investing with new hedge fund managers than their global counterparts. Fifty-six percent of investors globally will either invest in or consider investing in emerging managers, 53.7% will do the same for spin-off managers, while only 26% will either seed or consider seeding funds.

Excluding funds of hedge funds, asset managers are the leading investors in emerging managers in Asia-Pacific, making up 11.8% of the investor pool. This is followed closely by superannuation funds (10.5%) and insurance companies (7.9%).  For spin-off managers, insurance companies are the leading investors from Asia, making up 12.9% of the regional total. This is followed by superannuation funds (9.7%) and wealth managers (9.7%). Hedge fund managers looking for seed capital will find most favour with asset managers from the region, with this investor group representing 19% of the regional total. This is followed by investment companies and wealth managers, both responsible for 7.1% of Asia-Pacific-based investors that will seed hedge funds.

Within Asia-Pacific, investors in emerging managers are most likely to originate from Australia (30.3% of the total), followed by Japan (27.6%) and Hong Kong (17.1%). For spin-off managers, the largest number of potential investors are based in Japan (30.6%), followed by Australia (24.2%) and Hong Kong (17.7%).

As the development of the hedge fund industry in Asia-Pacific continues to gather pace, fund managers with a well thought out fundraising campaign will be able to hold a competitive edge in an increasingly crowded fundraising marketplace.

Posted by Ivan Jincheng Han on 21-Dec-2012

Keywords: hedge funds, asia, fundraising