China and India Private Equity Fundraising by Asia-Based Fund Managers, 2005 to October 2012

by Yong Xiang Pua

  • 08 Oct 2012
  • PE

From 2005 to October 2012, 863 Asia-based private equity funds (excluding funds of funds and real assets funds) that solely invest in Asia or have an allocation to the region raised $169bn in aggregate capital commitments. The majority of these funds have an allocation to China, India, or both. Seventy-two percent of the private equity funds with an allocation to Asia in this period included India, China or both within their investment focus, reflecting strong interest in the two nations from Asia-focused investors.

Asia-based funds that target China, India, or both, reached a fundraising peak of $34.3bn in capital commitments in 2011. This marks a strong recovery from 2009, which saw a dip to $9.0bn in aggregate capital raised by funds targeting investments in China and India. With less than a quarter of this year remaining, 49 Asia-based private equity funds investing in China and/or India have already successfully ended their fundraising campaign amid difficult fundraising conditions, and have collectively raised $10.4bn in capital commitments, making up 82% of the capital raised by Asia-based GPs.

A large proportion of China and India-focused funds that are managed by Asia-based managers and have held a final close in the period 2005 to October 2012 are country-specific funds; funds that target only China make up 70% of Asia-based private equity funds investing in China. Similarly, 70% of India-focused private equity funds are made up of India-specific funds in the same period. However, there is a larger contrast between China-specific funds and India-only funds in terms of proportion of capital raised. China-specific private equity funds accounted for 67% of the capital raised by Asia-based China-focused funds, while India-specific private equity funds accounted for 41% of commitments garnered by Asia-based funds with an allocation to India. This shows that investors are more willing to commit to country-specific funds when investing in China and region-focused funds when committing to India.

Between 2005 and October 2012, the composition of Asia-based private equity strategies targeting China has been more diverse than those targeting India. Growth funds have raised the largest pool of capital (41%) among China-focused private equity funds from 2005 to October 2012. Twenty-eight percent of the aggregate capital targeting China was raised by venture funds and 26% was contributed by buyout funds. For Asia-based private equity funds targeting India, the most favored fund types that have held a final close between 2005 and October 2012 are largely growth funds (62%), followed distantly by venture funds (15%), and buyout funds (15%).

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