Preqin currently tracks 18 Asia-based private equity fund of funds managers, 15 of which are planning to make new fund commitments over the coming 12 months. In total, they have an aggregate $11.5bn of assets under management. These investors contribute a significant amount of capital to the asset class and are therefore key players in the private equity arena. Within Asia, these investors are based in Singapore, Japan, China and Hong Kong, and represent 9% of all private equity fund of funds managers tracked by Preqin’s Investor Intelligence product.
Growth funds have proven to be the most sought-after fund type by Asia-based fund of funds managers, with 100% of those tracked by Preqin holding a preference for them. Growth deals often occur in emerging markets such as China and India where investee companies are relatively mature and successful, but where leverage and majority stakes cannot be or are not taken. Venture capital vehicles are the second most favourable choice for 89% of these investors, and buyout funds are also being targeted by 56% of these investors. Twenty-eight percent of tracked Asia-based fund of funds managers also look to invest in mezzanine, secondaries, special situations and distressed private equity funds.
Geographically, all 18 fund of funds managers have a preference for investing in funds which focus on opportunities in Asia. More specifically, regions targeted within Asia include Greater China and ASEAN countries such as Thailand, Malaysia and Indonesia. For example, NPEC Asia PEF II is a fund of funds currently in market that is exclusively targeting investment opportunities in Asia, with specific country focuses that include these attractive ASEAN regions. Private equity fund of fund manager Nomura Private Equity Capital is targeting $200mn for the vehicle and has held two interim closes to date. Funds focusing on Europe, the US or economies or regions outside of North America, Europe and Asia are also sought after by 11% of fund of funds managers.
Over the coming 12 months, 83% of these fund of funds managers plan to make new private equity fund commitments. Venture capital and growth vehicles focusing on opportunities in Asia are again the most preferred choice, with 93% and 80% of fund of funds managers respectively actively targeting these funds types, and 93% seeking vehicles focusing on opportunities in Asia.