Global fundraising has been more competitive due to the increasing number of fund managers, including first-time fund managers, in the private equity market. There are presently 361 Asia Pacific-based investors actively interested in private equity and 49% of these LPs are willing to consider first-time funds.
Investors that are willing to invest in first-time funds include Asian Development Bank (ADB). Since its first foray into the private equity scene in 1984, ADB invests in first-time funds targeting Asia as part of its scope to develop regional private equity markets and has a preference for venture and growth vehicles; however it may also consider suitable distressed debt and mezzanine funds. While ADB’s portfolio is diversified across various industries and geographies, the bank is looking to gain additional exposure to the clean technology and education sectors in Central and Southeast Asia.
Thailand’s Bangkok Bank only considers first-time funds on a case-by-case basis, placing emphasis on the quality and track record of the principal managers. It believes buyout and growth funds targeting Asia Pacific, including both Chinese and ASEAN markets, offer attractive opportunities. The bank is also willing to invest in various emerging markets in Asia, excluding India.
11.9% of the first-time fund investors will only invest in maiden funds managed by spin-off teams. One such investor is Japan-based Sony Life Insurance. While Sony Life Insurance would invest with first-time fund managers in the past, the insurance company will only consider spin-off teams going forwards. It is seeking new GP partnerships and will gradually reduce the number of existing GP relationships in its portfolio. Sony Life Insurance will seek opportunities offered by US and Japan-focused, small and mid-market buyout specialists. Past investments by the insurance company include commitments to buyout funds Charterhouse Capital Partners VIII and Ant Catalyzer Partners IV Private Equity Investment LP.