Hong Kong- and Singapore-Based Private Equity Fund Managers at a Glance – December 2015

by Diana Ramiro

  • 01 Dec 2015
  • PE

Hong Kong and Singapore, two of Asia’s established economies and biggest trading ports, host some of the largest private equity firms in the region. Preqin’s Fund Manager Profiles database tracks 308 private equity fund managers headquartered in these locations, with 166 based in Hong Kong and the remaining 142 in Singapore. Collectively, this group makes up 23% of all Asia-based GPs active in the asset class.

In terms of fund strategy, the fund managers of the two locations differ in their most preferred type of vehicle. Growth funds are targeted by 54% of Hong Kong-based investors, as shown in the chart below, while 65% of Singapore-based fund managers favour venture capital funds. This can be attributed to the city-state’s stable tax regime and government initiatives for GPs such as Early State Venture Fund, a co-funding scheme that enables selected fund managers focusing on technology start-ups to receive a dollar-for-dollar matching from the government.

Both Hong Kong and Singapore act as gateways to neighboring areas; Hong Kong provides access to the vast Chinese market, while Singapore offers a route for investors to gain exposure to the ASEAN economies. Eighty-one percent of Hong Kong-based fund managers target the Greater China region, with China alone attracting interest from 70% of firms headquartered in the former British colony. Other stated regions of interest for Hong Kong-based GPs include Asia (50%) and the Far East (39%). The ASEAN region, which has attractive investment opportunities due to factors such as positive economic development and favourable demographics, is the most preferred region for the majority (78%) of Singapore-based fund managers. A significant proportion (61%) of Singapore-based GPs focus on the domestic market as the city-state is well known for its robust legal framework, economic and political stability and ease of doing business. Fund managers headquartered in Singapore are also inclined towards investing in China (31%) and Indonesia (30%).

Hong Kong- and Singapore-based fund managers have accumulated $121bn over the past 10 years, with current uncalled capital estimated at $41bn. GPs located in Hong Kong have raised a hefty $99bn in the past decade, placing them behind their Chinese counterparts ($127bn), and have approximately $33bn of dry powder. In contrast, private equity firms headquartered in Singapore have raised $21bn in the last decade, just over one-fifth of the capital of their Hong Kong-based peers, and possess an estimated $8.2bn available to invest. This is partially be due to the larger size and greater potential of the market in the Greater China region compared to Southeast Asia, thereby attracting more capital towards Hong Kong.

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