Asia and Australasia are often grouped together in financial analysis, as the region Asia-Pacific, due to their geographic proximity; but do private equity investors in the two separate regions display investment characteristics similar enough to justify being grouped together? In this blog, we compare and contrast some private equity investor characteristics across the two regions.
The composition of private equity fund investors in Asia is more diverse than in Australasia. Corporate investors make up the most prominent group of Asia-based investors, representing 24% of the community. The next largest group of investors is comprised of investment companies and banks (including investment banks). They each form 13% of the total number of Asia-based LPs investing in private equity funds. Government agencies (12%) and insurance companies (11%) are also a significant LP community in Asia. Within Australasia, 71% of investors investing in private equity funds are comprised of superannuation schemes (54%) and asset managers (17%). Other significant investors in the region include foundations (7%), family offices (4%), and wealth managers (4%).
Asia-based private equity investors surpass their Australasian peers in terms of aggregate private equity allocation. While investors in Asia allocate an aggregate $68.5bn to private equity funds, investors in Australasia have a collective exposure of $32.3bn to the asset class. A large proportion of the Asia-based private equity allocation is committed by banks (29%), sovereign wealth funds (24%), and public pension funds (15%), representing 70% of the total private equity allocation in Asia. In Australia, close to 98% of the capital allocated to private equity comes from superannuation schemes, asset managers, and sovereign wealth funds.
The two regions are also distinctly different when considering their attitudes towards various fund strategies. While a larger share of Asia-based investors (73% compared to 56% for Australia-based investors) prefer venture capital funds, a larger proportion of Australasian LPs (58% compared to 42%) are interested in buyout funds. Asia-based investors are also less attracted to distressed private equity strategies, with only 17% expressing an interest in this strategy. One-third of investors within Australasia are willing to consider private equity funds that target distressed opportunities, including distressed debt, special situations, and turnarounds. The only fund type that draws a similar interest from both Asia and Australasia-based private equity investors is growth, for which approximately 50% of investors in both regions are interested in committing to this fund type.