2014 was an exceptional year for Asian private equity, with various political and regulatory changes inspiring higher confidence in private equity investments. Coupled with an economy that has much room for progress, private equity-backed buyout deals in Asia have shown the strongest rate of growth in terms of deal value when compared to any other region in 2014.
Preqin’s Buyout Deals Analyst online service recorded 3,475 buyout deals made globally in 2014 with a total value of $331bn. Asian deals accounted for 8% of the global total in terms of number of deals (down two percentage points compared to 2013) and 13% of the global aggregate value (up from the 8% in 2013). The aggregate deal size of private equity-backed buyout deals in Asia in 2014 grew by 68% compared to 2013 (from $25bn to $42bn), far greater than the 12% increase in Europe, 2% decrease in North America and 36% increase in the Rest of World region.
Asia was also the most prominent region with regards to the increase in the average deal size, with 100% growth between 2013 and 2014, while the average deal size in Europe increased by 29%, in North America by 2% and in the Rest of World region by 9%. It is also worth noting that 2014 continued the trend that began in 2011 of a year-on-year increase in the average deal size of buyout deals in Asia.
Asia’s two largest economies – China and India – represented 26% and 36% of the number of Asian private equity-backed buyout investments made in 2014 respectively. China and India also accounted for 45% and 8% of the aggregate value of deals respectively. Despite South Korean private equity-backed deals in 2014 accounting for only 6% of deals in terms of number of investments, the aggregate value of deals in the country contributed 21% to the Asian total and represented the second highest proportion of aggregate value, after Chinese deals. Both countries experienced a substantial increase in the aggregate value of private equity investments in 2014 compared to the previous year. The aggregate deal size of China-based transactions more than doubled from $8bn in 2013 to $19bn in 2014, while the total value of investments in South Korea increased by 106%, largely due to the $3.6bn investment made in the South Korea-based firm Halla Visteon Climate Control Corp by Hahn & Company and Hankook Tire Co. in December 2014. This deal alone accounted for 40% of the total value of private equity deals concluded in South Korea in 2014; it was also the largest private equity-backed investment in Asia during the year.