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Asia-Focused Funds Continue to Make Up the Majority of Private Equity Growth Market - March 2014

by Luke Goldsmith

  • 12 Mar 2014
  • PE

The growth market in private equity continues to be dominated by Asia-focused funds. From China to Thailand and Indonesia, many national Asian governments are committed to improving living standards and reducing their reliance on exports. Large populations, growing incomes and urbanization are contributing to driving an economic transformation that is creating opportunities for private equity investors. The rapid GDP rise in these nations compared to the US and Europe, which in some countries saw negative growth during the worldwide economic downturn, has led to an obvious focus on Asian nations.

According to Preqin’s Funds in Market database there are 254 private equity funds in market with a growth strategy, and these funds are targeting just over $70bn in total capital commitments. Out of all these funds, Asia-focused vehicles are by far the most numerous with 121 funds currently seeking to raise capital. In terms of the aggregate amount of capital they seek to raise, funds of this primary geographic focus account for over half (53%) the amount of capital targeted by all private equity growth funds on the fundraising trail.

Africa is another hub for growth private equity fundraising with GDP in the continent in recent years growing strongly along with a rising middle class and more political stability. There are currently 21 Africa-focused growth funds in market looking to raise just over an aggregate $4bn. Despite the fact that growth fundraising figures show that Africa is behind both the US and Europe, comparisons to the region’s corresponding statistics for 2013 suggest that this year, more appetite exists for Africa, which will perhaps lead to more vehicles successfully closing. This time last year there were only 10 funds in market aiming to gather an aggregate $1.7bn.

Growth private equity fundraising still has a quite a way to go to match its peak in 2011 when 130 funds closed, raising over $37bn of total capital. In the following two years there was a steady decline in both the number of funds raised and the amount of capital garnered. So far in 2014 there have only been five funds that have successfully held a final close. Growth private equity may be a very commonly utilized strategy still in emerging markets but the figures show it is still some way behind its best years.

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