From 2006 to present, there have been 76 Asia-based buyout funds that have successfully held a final close, collectively raising an aggregate $43.4bn from investors. Thirty of these buyout funds were raised by Japan-based fund managers, while Hong Kong-based GPs successfully held a final close for 21 funds. South Korean fund managers completed fundraising for 17 buyout vehicles and China-based GPs successfully closed 15 buyout funds during this period. In terms of aggregate capital raised, China-based buyout funds have led the field, managing to garner $16bn from 2006 to present. Hong Kong-based buyout funds secured $13.bn worth of LP commitments, while Japan-based funds garnered a collective $10.6bn in the same period.
The largest Asia-based buyout fund raised from 2006 to present is Affinity Asia Pacific Fund III, which exceeded its original target of $2bn, closing on $2.8bn in 2007. The fund is managed by Affinity Equity Partners, which was spun off from UBS Captial Asia Pacific in 2004. Affinity Asia Pacific Fund III targets leveraged buyouts and majority stake acquisitions within Asia and Australasia. The collective pool of capital garnered by 15 Asia-based buyout funds in 2007 amounted to $7.5bn.
In 2008, an aggregate capital of $9.6bn was raised by 16 Asia-based buyout funds, of which the largest fund that year was raised by China-based Hopu Investment Management. Founded in 2007, the firm attracted $2.5bn for Hopu USD Master Fund I, which predominantly targets China-based opportunities. While the fund focuses on buyout investments, it may also seek growth capital injection in relatively mature companies.
While the aggregate capital raised by Asia-based buyout funds dipped to $4.3bn and $4.9bn in 2009 and 2010 respectively, Asia buyout specialists were able to recapture investor interest in the following year. Twelve Asia-based buyout funds raised an aggregate $11.1bn, marking 2011 as the best fundraising year for Asia-based buyout specialists. Chinese firm Hony Capital was the most successful Asia-based buyout fund manager in 2011 in terms of aggregate capital raised, securing a total of $3.9bn worth of LP commitments for Hony Capital Fund V and Hony Capital RMB Fund II. Hony Capital predominantly targets buyout and growth opportunities within China and invests across various sectors. It may also invest in foreign companies that seek to penetrate the Chinese market through the USD-denominated Hony Capital Fund V. Other significant funds that held a final close in 2011 include Hong Kong-based RRJ Management’s $2.3bn RRJ Capital Master Fund I and Indonesia-based Northstar Pacific’s $820mn Northstar Equity Partners III.
Japan’s DRC Capital is the only Asia-based GP that has successfully held a final close for a buyout vehicle since the start of 2012, raising JPY6.6bn (approximately $82mn) for Japan-focused DRC II. What is the outlook? There are currently 18 Asia-based buyout funds on the road, targeting $7.7bn in aggregate commitments. Eight of these funds have already secured $3.2bn via interim closes, suggesting strong appetite from investors. Of these 18 vehicles in market, four Hong Kong-based buyout funds are seeking to raise $3.9bn while there are six buyout funds targeting $1.6bn that are based in Japan. The remaining Asia-based buyout funds are based in China, India, Singapore, and South Korea. While the aggregate fundraising target is less than the total aggregate capital raised last year, regional competition for LP commitments may intensify with the potential launch of new buyout funds in the second half of 2012.