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Asia-Focused Private Equity Buyout Funds in Market– January 2014

by Cheng Jia Ong

  • 17 Jan 2014
  • PE

Buyout fundraising in Asia made headlines last year when KKR raised a record $6bn for its second Asia-focused buyout fund. This is a sign that buyout fundraising in the region is starting to pick up momentum, and has attracted much interest from investors worldwide. Preqin’s Funds in Market online service currently tracks 48 private equity buyout funds that have a primary focus on Asia. Collectively, these buyout vehicles are targeting an aggregate $54.1bn. 

Looking at the geographical focus of the 48 Asia-focused buyout funds, China is the most highly sought after destination and is targeted by 44% of these vehicles. Japan is the next most favored region for investments by these funds, with 23% seeking opportunities in the region. This is closely followed by South Korea (17%), Central Asia (13%), India (13%) and the ASEAN region (10%). Unsurprisingly, China and the relatively developed markets of Japan and South Korea in North Asia garner much interest from buyout investors due to a greater pool of deal-making opportunities bearing large deal sizes. Overall, 67% of Asia-focused buyout funds currently in market will solely target the Asia region, while the remaining 33% of the corpus also considers regions outside of Asia as part of their geographical focus. Of these 16 buyout funds that seek a wider exposure, a significant 75% target Europe (including Central and East Europe), followed by North America (31%) and Australasia (19%). 

With regard to GP location, there is a fairly even spread noted across countries. The US leads with 21%, followed by Hong Kong (15%) and Japan (13%). China, India and Russia are each home to 10% of GPs currently raising Asia-focused buyout funds. The remaining 21% is split between GPs located in both Asia and regions outside of Asia such as Kazakhstan, Luxembourg, South Korea, Sweden, Malaysia and the UK. 

Forty percent of Asia-focused buyout funds currently in market have yet to hold their initial interim close. A further 46% of the funds in this pool are at their first-close, and 10% at their second close. The remaining vehicles have held third and fifth closes respectively. Furthermore, a significant 65% of Asia-focused buyout funds are vintage 2013, while vintage 2014 and 2012 account for 17% and 13% of the corpus respectively. The remaining 5% made their initial investments in 2011 or before.

The top three largest Asia-focused buyout funds currently being raised each have a target fund size of $3.5bn.  They are Hong Kong-based Affinity Asia Pacific Fund IV, US-based Carlyle Asia Partners IV and US-based TPG Asia VI.

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