Singapore defies global fundraising slump in a breakout year

Private capital fund managers in the city-state have amassed a record cash pile, dethroning APAC heavyweight China for the first time since 2007

Warren Buffet's famous words, 'you only find out who’s swimming naked when the tide goes out,' couldn't be more appropriately applied than in a bear market amid an economic downturn. But we can also look at it through the lens of resilience. 

Singapore has emerged as one of the rare financial hubs in the world to attract a record cash pile, defying the gravity of a global fundraising slump.

Fundraising worldwide has slowed this year to a five-year low, with aggregate capital raised so far in 2022 of $1.19tn, down 20% from last year’s record $1.49tn (Fig. 1). All major regions saw a year-on-year decline in fundraising this year (Fig 2), but Singapore has stood out as a beacon fundraising market, amassing a record amount of capital.

Despite Singapore’s standout performance, it’s still insufficient to put the wider APAC region in the green. This is as fundraising in China, the heavyweight in the region, plunged 81% to $21.5bn in 2022 YTD from $116bn last year. Led by China's decline, fundraising in APAC is down 56% this year at $97.5bn from last year's $220bn.

Fundraising in North America and Europe also shrunk by 9% and 30%, respectively so far this year compared with the whole of 2021, reflecting investor caution.

Singapore dethrones China’s fundraising crown
China has long dominated the fundraising arena in APAC, raising the most capital since 2008. However, the tables turned for the first time this year as Singapore has dethroned China in total aggregate capital raised (Fig 3), crowning itself as the region's fundraising star (Fig 4).

After years of superheated growth, China's fundraising is facing a dry spell as bearish sentiment among investors mounts amid concerns over the world's second-largest economy's slowing growth and rising investment risks. Thousands of protestors flooded the streets of major cities last month against Beijing's COVID-19 restrictions that have taken a significant toll on the economy.

While fundraising in China nosedived, Singapore-based dealmakers raked in a record $24.5bn in the final closing of 42 funds so far this year, up 70% from 2021's $14.3bn.(Fig. 5). Average fund size almost tripled from last year, primarily due to several billion-dollar vehicles by Singapore-based fund manager GLP focused mostly on logistics properties in China. This year's spectacular performance follows the 112% growth in aggregate capital raised last year after fundraising hit a pandemic-induced trough in 2020.

A wider investor pool
Besides fundraising from institutional investors which more are now reaching allocation limits, private banks and high-net-worth individuals are becoming increasingly important new sources of LP capital, as reported in Preqin Special Report: The Future of Alternatives in 2027. This comes as family offices’ investment mandate flexibility makes them relatively less affected by the denominator effect caused by current public markets markdowns, resulting in a shrinking portfolio value that pushes private equity allocations closer to over-target. 

The past year has seen an explosive rise in private wealth managers based in Singapore. The number of single-family offices almost doubled to 700 last year, with an additional 100 licenses approved by the Monetary Authority of Singapore in 2022. 

Drawn by Singapore’s reputation as a low-tax bastion of safety and stability, India's wealthiest man Mukesh Ambani, chair of Reliance Industries, became the most recent high-profile business figure to have set up shop there to diversify his wealth. 

Over the past few months, Liang Xinjun, the co-founder of the Fosun Group, emigrated to Singapore after setting up a family office there three years ago, while Hong Kong tycoon Li Ka-Shing's Horizons Ventures also established an office. They joined the ranks of former De Beers chairman Nicky Oppenheimer, Bridgewater Associates founder Ray Dalio, and Google co-founder Sergey Brin in crowding Singapore’s shores.

Billion-dollar funds
Singapore-based logistics powerhouse GLP, one of the world's largest real estate fund managers overseeing $120bn of assets, stands out for raising five of the seven billion-dollar-plus funds this year in the city-state. Its largest fund, GLP China Income Partners V, closed at $5bn in July to invest in logistics properties across the mainland in what is China's largest-ever private logistics income fund.

While China has been plagued by a spiralling property crisis sparked by two years of crackdowns on the sector, commercial property remains a bright spot in the embattled real estate market.

Last month, Beijing rolled out sweeping measures, including credit support for property developers, to prop up the ailing residential market. The move is viewed by many market watchers as the strongest signal yet to shore up confidence in the sector. Nevertheless, Chinese authorities have long earmarked infrastructure investments as a priority to revive the sluggish economy. This includes 'new economy' investments that would benefit logistics and data centres. Demand for warehouse space has surged after two years of lockdowns have shifted consumer habits to online shopping.

Given China's logistics prospects, GLP raised $2bn in June this year in the final closing of its GLP China Logistics Fund III. In November, it also raised $1bn and $760mn for its sixth and seventh China logistics income fund series, respectively, to invest in e-commerce, logistics, and retail assets. In China alone, GLP raised $8.8bn to invest in its logistics sector across four funds this year, boosting Singapore-based alternative assets funds allocation to China to the largest geographical focus and accounting for $9.5bn invested this year (Fig 6).

This year, the other billion-dollar final closing vehicles GLP struck include $3.6bn GLP Japan Development Partners IV and $1.1bn GLP Vietnam Development Partners I, both focusing on logistics properties. Japan and Vietnam are increasingly seen as alternative manufacturing locations to China in North Asia and Southeast Asia, respectively, as foreign companies seek to diversify supply chains and production lines. With $13.5bn raised across the six funds, GLP alone raised over half of Singapore’s total fundraising sum.

The other two backers of billion-dollar deals are Singaporean healthcare private equity firm CBC Group, and Keppel Capital, the asset management arm of Singaporean infrastructure conglomerate Keppel Corporation. CBC Group closed $1.6bn in April in a buyout fund targeting pharmaceutical and MedTech investments in Asia, including China. Meanwhile, Keppel Capital raised $1.1bn at its final close in January for its data center fund to invest across Asia, focusing on emerging peers.

While real estate investments constituted 64% of Singapore’s total funds raised this year (Fig. 7), venture capital (VC) firms have raised a record $2.8bn in early-stage investments across 15 funds. Singapore-based VC firm East Ventures has been most active in the early-stage space, raising $1.1bn across three funds focused on technology investments in Indonesia and Southeast Asia. 

The record funds raised by private equity-backed real estate and venture capital’s early-stage strategies (Fig. 7.1) have propelled Singapore’s cash pile to an all-time high, reflecting a fertile fundraising environment in the country. A deeper look at Singapore’s ascent as a fundraising magnet also lies in its unique ability to benefit from an increasingly decoupled world at a time when Chinese nationalism is on the rise, prompting more firms to establish a presence in the city-state for a more neutral international image.