Asia has long been considered one of the most attractive regions for private equity within emerging markets, and 2014 saw the highest amount of private equity capital focusing on the region accumulated since 2008, at $73bn. Despite this, the number of funds closed targeting the region has fallen year on year since 2011. This blog will look at investor appetite for private equity in Asia.
Preqin’s Investor Intelligence database currently tracks over 5,800 LPs active in private equity, 32% of which have previously invested in an Asia-focused fund. A total of 2,289 active investors list Asia as a geographic preference; these LPs have an aggregated allocation of over $1.9tn to private equity. Just over half of those LPs with a preference for Asia-focused funds are North America based (53%), with Asia-based investors ranking second (23%).
Preqin’s Fund Searches and Mandates tool currently tracks 224 investors that are looking to make new commitments to Asia-focused private equity vehicles as part of a wider geographical focus over the next 12 months. As the chart above outlines, 42% of these investors are based in North America, 27% are Europe based and just over a quarter are Asia based (26%). A significant proportion of Asia-based investors demonstrate a preference for investing in domestic funds, with just fewer than 80% of Asia-based LPs stating a preference for Asia-focused investments. Buyout is the most preferred private equity fund type for LPs that have an eye on Asian investing; 83% of LPs are looking to invest buyout funds in the region over the next 12 months, followed closely by venture capital vehicles (79%).
There remains both global and domestic appetite for Asian private equity investments. Preqin’s database shows that almost 40% of all LPs active within private equity consider Asia when looking for investment opportunities, providing fund managers from the continent with a large investor pool to approach.