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Asia private equity investors looking to invest abroad

by Yong Xiang Pua

  • 27 Apr 2012
  • PE

While interest in Asian private equity continues to grow, investors within the region are looking to gain exposure to non-Asian private equity to diversify their portfolio. There are 288 private equity investors based in Asia, excluding Australasia, which allocate an aggregate $91.2bn to the asset class. Forty three percent of these investors have indicated an interest in private equity funds investing beyond the region. The majority of Asia-based investors seeking private equity opportunities outside of Asia are based in Japan (41%), Singapore (14%), and South Korea (11%). In terms of existing private equity allocation, Japanese LPs collectively have the largest exposure to the asset class (38%), followed by those based in Singapore (31%) and China (12%).

Sovereign wealth funds are the biggest Asian investors with interests in non-Asia focused funds. While they make up only 6% of the investor pool, their aggregate allocation to private equity amounts to 40% of the capital invested by the LPs based in the region, making sovereign wealth funds an important source of capital. Other significant investor types in terms of private equity allocation include banks (21%), fund of funds managers (14%) and pension funds (14%).  

When investing outside of Asia, the majority or 85% of Asian investors aim to invest in US-focused funds. Fifty nine percent seek to invest in European funds while 20% target opportunities among Australasia-focused funds. Less than one-fifth (15%) of Asian investors will consider Middle Eastern and African funds. In terms of fund types, venture funds are most popular amongst Asian investors. Eighty percent of the investors are willing to invest in either generalist or stage specific venture funds. An approximate equal amount of investors are interested in growth funds (69%) and buyout funds (66%) each. Slightly more than a third (36%) of the investors are willing to consider distressed strategies, including distressed debt, turnaround, and special situations, targeting non-Asian companies. Thirty percent of the investors are interested in non-Asia-focused mezzanine funds.

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