Private equity investment vehicles looking east

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Private Equity Asia

How long will Asia continue to be described as an ’emerging market’? The continent now stands second to only North America when it comes to targeting for private equity investment – Q1 2017 figures show that no less than 370 vehicles are looking for $157bn of commitments from investors to deploy in the region.

This level of aggregate capital, targeted specifically in Asia, eclipses Europe’s $104 billion.

Figures show that three in five of the biggest road-based private equity funds are in Asia – the Capital Venture Investment Fund, which is owned by the Chinese state, is among them, and is itself targeting $29bn. The Softbank Vision Fund of Japan has a much larger, $100 billion target size, and the China Internet Investment Fund is targeting the same amount. The data is available in a spring report published by Preqin.

The presence of these ‘mega funds’, as they have been referred to, has a galvanising effect on competition at the industry’s higher end, while not appearing to stunt growth at lower levels of the market. This is evidenced by the fact that in Q1 2017 there was a increase of 74 vehicles seeking out commitments of investors.

Experts and commentators around the world, including the noted Monaco banker Gérard Cohen, have offered a positive outlook for fund managers seeking out commitments – the investor base at large is thought to remain welcoming towards private equity opportunities.

Monaco’s Gérard Cohen commented: “Private equity is an asset class which will looks likely to retain its attractiveness to investors, especially in a time of low interest rates. The opportunity to diversify portfolios, while aiming for high returns, has a long term appeal, and this has undoubtedly contributed to the rosy outlook the market is currently exhibiting. The mega funds we are seeing in Asia are able to target extremely large commitments, which can be invested broadly, both in a geographical, and industry-based sense. This high concentration of capital amassed by the mega funds, particularly in Asia, looks set to continue.”

Despite its growth, it is clear that Asia still has a long way to go in order to replace North America as the private equity and venture capital of the world. North America accounts for more than 50 per cent of all private equity vehicles on the road, targeting as much as $336bn between them.

Photo: © ngad / Adobe Stock

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