2012 Outlook for Asia PE Funds


Stratiqa talks to Asian Private Equity investors. Investors remain bullish and will commit the same amount of capital or even more. The focus will be local, focusing on home markets and close neighbouring markets.

Close to 85% of Asia-Pacific Private Equity investors plan to commit the same amount or more capital in 2012, with 70% of them looking to invest locally according to data collected by Stratiqa.

“Markets are maturing in Asia, and there are emerging economies in South East Asia coming out of distress like Sri Lanka, Cambodia and Bangladesh. Investors still look for growth in Asia with stagnating growth in the West. Fundamentals are still strong in Asia, and we believe a rising consumer market with increased purchasing power makes Asia the place to be.” Stratiqa said.

Our conversations with Asian investors suggest that they are likely to stay focused investing in private equity and real estate. Many investors are strengthening their focus towards forming family conglomerates rather than the GP/LP structure. However given the rising demand of Western investors to enter Asian markets, the traditional private equity structure is still prevailing in Asia in terms of growth.

80% of the Asia based PE investors preferred investing locally, however, 2/3 indicated that China as a market is becoming very crowded and there are too few worthwhile deals. Nearly half of the investors surveyed pointed towards ASEAN for the best opportunities in the region. Malaysia, Indonesia and Thailand were the three strongest markets for potential acquisitions.

The survey revealed that LP's want to gain exposure to PE funds run by local managers and teams with heavy operational experience from the region/country. However, 40% said they were still open to consider investing in Asia Pacific funds managed by international teams.

Nearly half the PE investors surveyed said small to mid-market buyout funds in the region presented the most attractive opportunities. However lack of transparency in management fee expenses was a recurrent concern of these investors, urging for more transparency due to the lack of transparency around the valuation of portfolio companies.

In the short term 20% of investors in the region expected to increase their allocations to Private Equity in 2012. 60% expect to increase their allocation to PE in the longer term.

“In this increasing competitive fundraising environment, we look for GP’s putting in at least 15% of the capital into the fund themselves. Ideally the GP’s will have an operational background having brought a company public at some point in their career” – said RTL Holdings CEO Jong Lee.

KKR, Carlyle and TPG are all refocusing their efforts towards Asia, looking for mega-deals in the region. Foreign listed companies are typical targets of these firms. However big grey listed companies in Indonesia and Malaysia has been purchased by these firms. In particular in the commodities and chemical sectors.

Chinese Outbound M&A Trends

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