Private Equity in Singapore – October 2013

by Valerie Lee

  • 25 Oct 2013
  • PE

Singapore’s economy has remained remarkably stable in recent years, and with strong economic growth and increased GDP each year, there has been a significant amount of financial interest in the city-state. The private equity market has also proven to be fairly active and with Singapore being seen as an attractive financial hub, it has caused an influx of private equity firms such as KKR and Blackstone to set up operations in the region. Blackstone Group has recently launched its venture into Singapore with a team of 35 in the Marina Bay Financial Centre. Large private equity firms are increasingly viewing Singapore as an ideal entry point into the Asian market.

The private equity fund market in Singapore has been fairly active over the last year. Twenty-one funds raised by Singapore-based fund managers reached a final or interim close in the last 12 months. L Capital Asia, part of the LVMH Group, recently reached a final close for its second growth fund on $950mn in August 2013. Similarly, Southern Capital Group reached a final-close of $408mn in July this year for its third fund. TAEL Partners, the third largest Singapore-based private equity firm, based on total funds raised in the last ten years, could achieve a second close in the coming months for its growth fund, The Asian Entrepreneur Legacy Two.

Preqin’s data reveals that there are 102 private equity fund managers headquartered in Singapore. These GPs have collectively raised a total of $12.5bn in private equity funds over the last ten years and have an estimated amount of $5.2bn in dry powder. The top three private equity firms in Singapore based on total funds raised in the last decade are L Capital Asia, Northstar Group and TAEL Partners. The aggregate amount of total funds raised in the last ten years by the three largest Singapore-based private equity firms accounts for 30% of the country’s total. Notably, a further 144 private equity fund managers globally, have secondary operations in Singapore.

Fifty percent of Singapore-based fund managers will consider growth funds within their investment preferences as part of their overall investment strategy. Fund managers that include growth funds within their investment scope have over $4bn in dry powder and have raised more than $9bn in aggregate capital commitments over the last ten years. Following closely behind is venture capital, with 32% of the corpus willing to invest in this strategy.

On the LP side, Preqin’s Investor Intelligence currently tracks 34 Singapore-based LPs that actively invest in the private equity asset class. Investors based within Singapore have aggregate total assets of over $1.1trn. When looking at the types of funds that Singapore-based investors look to commit to, buyout and venture capital funds are the most popular, each favoured by 53% of the investor pool. This is followed closely by growth funds at 47% and mezzanine strategies at 32%.

Wealth managers form the largest proportion of investors that are based in Singapore and comprise 20% of the total number of LPs in city-state. Family offices (17%) make up the next largest  investor group, while endowment plans, investment companies and private equity fund of funds managers each represent 9% of the investor pool. The remaining 36% are banks, corporate investors, government agencies, insurance companies, private equity firms and sovereign wealth funds, each making up 6% of the corpus. The three largest private equity investors that are headquartered in Singapore, by funds under management, are Temasek Holdings, GIC and OCBC bank.

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