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Asia-Focused Private Equity Funds in Market Raised by International GPs – August 2013

by Cheng Jia Ong

  • 23 Aug 2013
  • PE

As economic uncertainty prevails in Western markets, non-Asia-based private equity fund managers are seeking to take advantage of increased investment opportunities in stable Asian markets. In this blog, we take a look at Asia-focused funds in market that are being raised by international managers. Preqin’s Funds in Market tracks 45 private equity funds (excluding fund of funds, real estate and infrastructure) that have a primary focus on Asia and are raised by non-Asia-based GPs. The aggregate capital targeted by these vehicles is $24bn.

A significant 71% of foreign GPs that are currently raising Asia-focused funds are located in the US. These managers, located in the federal republic, are targeting an aggregate of $18.3bn, which represents 76% of the total amount targeted by these funds. Following this, Mauritius is home to 9% of such managers, Australia and the UK account for 4% each and the remainder is split between GPs located in Cayman Islands, France, Luxembourg and United Arab Emirates.

In terms of fund type, venture capital is the most common strategy used by non-Asia-based managers raising Asia-focused funds, representing 40% of the corpus. Growth (33%) is the next most utilized strategy, followed by buyout (18%). The remaining 9% of funds are split between distressed private equity, mezzanine and natural resources. This favor for growth and venture capital strategies is largely indicative of the trend seen by Asia-focused funds. Looking at the regional focus of the 45 funds in this pool, Greater China and South Asia are targeted by 44% of these vehicles respectively, 24% will seek investment opportunities in ASEAN and 18% will do so in North Asia. It is unsurprising that the two Asian giants, China and India, see their respective regions as the most sought after destination for private equity capital deployed in Asia by non domestic managers.

With regards to vintage year, the largest proportion of Asia-focused funds in market raised by non-Asia GPs (62%) are vintage 2013, suggesting that many of the funds in this pool are in the early stages of their fundraising cycle. Twenty-two percent of the funds are vintage 2012, while 9% are vintage 2011. The remaining vehicles either began making their initial investments in 2010 or plan to do so in 2014.  Fifty-six percent of these funds have not reached an interim close as yet, 35% are at the first-close stage and the remaining 9% are at second-close.

An example of a large Asia-focused fund currently being raised by a non-Asia-based GP is New York-based Mount Kellett Capital Management’s, special situations fund, Mount Kellett Capital Partners III. The vehicle is being raised on the heels of its predecessor which achieved a final close in 2012 having raised $4bn for investments primarily in China and India.

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