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Asia-Pacific-Based Family Offices Investing in Private Equity – June 2014

by Cheng Jia Ong

  • 13 Jun 2014
  • PE

Tasked with the responsibility to preserve and generate wealth for affluent families, family offices are traditionally receptive to investing in private equity funds as part of their investment portfolio. With Asia-Pacific poised to be a growing financial center and magnet for high-net-worth individuals and families, Asia-Pacific-based family offices will be an increasingly important source of investment for the private equity industry. Preqin’s Investor Intelligence online service currently tracks 32 Asia-Pacific-based family offices with a preference for private equity funds, constituting 8.3% of family offices worldwide that are interested in the asset class. Of this corpus, there is a fairly even split between single-family and multi-family structures, with single-family offices comprising 53% of these investors, and multi-family offices accounting for the remaining 47%. 

India and Singapore are each home to the largest proportion (28%) of Asia-Pacific-based family offices with an interest in private equity funds. Hong Kong represents the next most significant location, with 19% of investors based there, followed by Australia (9%). The remaining 16% is split between other countries such as China, Japan, Taiwan and Thailand. 

Fund type preference is highly skewed towards venture capital funds (including stage-specific and generalist vehicles), with a hefty 83% of Asia-Pacific-based family offices having a preference for this strategy. The next most preferred fund type is buyout (58%), closely followed by growth (50%). These well-heeled investors also have a preference for distressed vehicles (21%) which include special situations and turnaround, as well as mezzanine funds (13%). 

In terms of geographic preferences for the Asia-Pacific region, 24% of Asia-Pacific-based family offices are seeking investment opportunities in South Asia, followed by ASEAN (7%). Overall, 28% of Asia-Pacific-based family offices investing in private equity have an investment mandate that strictly targets the Asia-Pacific region. This indicates that a significant 72% of the corpus seeks a global exposure when investing in this particular asset class. Forty-three percent of investors in this pool, that are seeking external investments in private equity funds, target emerging markets as an investment destination. Other markets include North America (33%) and Europe (33%). These statistics indicate that overseas markets form a critical part of Asia-Pacific-based family offices’ strategic allocation to private equity. 

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