International LPs Investing in Asia-Pacific

by Louise Weller

  • 04 Oct 2011
  • PE

Preqin currently tracks 582 international LPs (excluding fund of funds managers) that have previously invested in, or stated a preference for investing in the Asia-Pacific Region (including Australasia). When broken down by LP type, 30% of international investors with an interest in Asia, or those that have previously invested in Asia, are public pension funds, followed by foundations and endowment plans, which represent 26% of international investors interested in the region.

In August 2011, Preqin conducted interviews with 50 prominent international LPs that have an interest in investing in the Asia-Pacific region, in order to gain a more in-depth insight into their preferences and future investment plans within the region. The results showed many LPs continue to view the region as a positive place and are looking to continue investing in the region. 41% of the LPs interviewed are looking to make their next commitment to an Asia-Pacific fund by the end of 2011, with a further 17% looking to make such a commitment in 2012.

Geographically, Greater China and India are seen to currently present the best opportunities for investment, with 68% and 61% of LPs interviewed naming each region respectively. Furthermore, 32% of LPs named ASEAN countries as presenting the best opportunities for investment, whilst 10% see strong investment opportunities in Australasia.

In terms of LPs’ favoured fund types, over a third (34%) of participants in the study named small to mid-market buyout funds as presenting the best opportunities, with the same proportion of investors also naming growth funds. A quarter of LPs interviewed noted opportunities in the funds of funds space, with many smaller or inexperienced LPs believing such vehicles are a good way to gain access to investments in the region. Distressed private equity funds are a less popular choice for LPs, with only 2% of international investors believing these types of funds present the best opportunities for investment at the moment within the Asia-Pacific region.

Going forward, the outlook for investments in the Asia-Pacific region is promising. A significant 90% of the LPs we interviewed intend to maintain or increase their allocation to Asia-Pacific investments in the longer term. As the region continues to grow and the private equity market becomes increasingly developed, international investors are likely to keep viewing Asia-Pacific as an encouraging region to deploy their capital.

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