It is difficult to keep the ASEAN region and South East Asia out of the news; from forest fires and premiership pre-season tours to government elections, the region has become a central focal-point for international interest. This rapidly growing interest in Asia’s frontier market has extended to private equity in recent times. There is keen interest from players across the industry in the potential of the region and the possibility of ASEAN private equity moving from potential to real opportunity – but what is the current state of play in the ASEAN private equity industry?
On the LP side, Preqin’s Investor Intelligence shows that Singapore and Malaysia, two of the most developed ASEAN nations, are home to almost three-quarters of active ASEAN-based investors in private equity, representing 52% and 20% of the corpus respectively. Eleven percent are located in Thailand and 4% in Vietnam; the remainder are split among other ASEAN nations. The type of investor found in the region is much more split. Wealth managers and banks account for 12% of the investor pool, corporate investors and insurance companies account for 11% each and government agencies represent 9% of these investors. Further down the list, investment companies make up 8% of ASEAN-based investors in private equity, while private equity firms, public pension funds and sovereign wealth funds are responsible for 6% of these investors each. The remaining investor types found are endowment plans, single- and multi-family offices and funds of funds managers. These LPs typically invest close to home, with none expressing an interest in investing solely outside of Asia, and 40% specifying ASEAN as a private equity focal point for their future commitments as opposed to Asia more generally.
On the GP side, Preqin’s Funds in Market shows that there are currently 65 private equity funds in market that specify ASEAN as an investment destination, with 25 of these vehicles targeting only the ASEAN region. Growth funds represent the majority of solely-ASEAN focused private equity funds in market, with 60% of vehicles falling into this category. Venture capital funds, of all stages, comprise 24% of the corpus and the remainder is split among other fund types including balanced, distressed debt and mezzanine. Of these 25 vehicles, the majority are fairly new to market with 64% yet to hold an interim close. A fifth are at the first close stage and able to begin investing capital and 16% have reached a second close as they look to secure their overall targeted commitments. Unsurprisingly, the most mature ASEAN market, Singapore, is home to the most GPs with ASEAN-specific private equity funds in market, with 28% of managers located in the city-state. Vietnam is home to 20% of the managers of these funds and, unsurprisingly, the US provides the third highest number of GPs within this particular pool, with 16% located in the federal republic.