Asia-Based Private Equity Investors With a Preference for Buyout Funds – September 2013

by Jeviene Sim

  • 30 Sep 2013
  • PE

Our recent Preqin Special Report: Asian Private Equity and accompanying press release revealed that Asia-based investors increasingly have a preference for buyout funds and currently view this fund type as the most attractive for private equity investment in the current climate. Following this, we take a look at the characteristics of these particular LPs. Over 40% of the active Asia-based private equity investors tracked by Preqin’s Investor Intelligence are actively seeking to invest, or have previously invested in buyout funds. As the Asian private equity market matures, Asia-based investors seek to mirror the diverse range of strategies adopted by investors hailing from other regions, and a part of this shift in strategy is an increased appetite for buyout funds. The aggregate total assets of these Asia-based investors with a preference for buyout funds are approximately $22.1tn.

In terms of geographic location, Asia-based investors with a preference for buyout funds are rather evenly spread throughout the Asia region, with Japan being home to the largest proportion (28%). China and South Korea represent the next most significant locations at 20% and 19% respectively, while Singapore and Hong Kong are both home to 8% of this investor pool each. India and Taiwan are each home to 5% of the corpus, while the remaining 7% is split by other nations, including those in ASEAN.

There is once again a fairly equal distribution seen among the various institutions that make up Asia-based Investors with a preference for buyout funds. Insurance companies account for the highest proportion at  15%, followed closely by banks at 13% and corporate investors at 10%. The LP types which make up between 5% to 10% of investors in this pool each are fund of funds managers, investment companies, government agencies, public pension funds, asset managers and wealth managers; other investor types each representing less than 5% of the total each. This shows that appetite for buyout funds from within Asia is not largely dominated by any specific investor group.

In terms of preference for fund focus within Asia, slightly more than half of all Asia-based investors with a preference for buyout funds display a geographic preference for Greater China. Seventeen percent of investors target South Asia while 15% of investors focus on the neighboring ASEAN region. Besides investing in Asia, a significant 69% of Asia-based investors with an appetite for buyout funds also look outside the borders of Asia when committing to such vehicles. Of the investors in this pool that are seeking international investments in buyout funds, 45% target Europe as an investment destination for buyout funds, while 58% target North America. It is interesting to note that despite being Asia-based investors, many within this group see increased value and opportunity in buyout investments outside of the region itself, with the developed markets of North America and Europe proving the most favourable.

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