Affinity Equity Partners targets $5bn for Fund V

The pan-Asian manager is targeting around 30 percent more than the $3.8bn it raised for its previous Asia Pacific-focused buyout vehicle.

Affinity Equity Partners, the Hong Kong-based pan-Asian manager, is seeking $5 billion for its fifth fund, larger than its 2013-vintage $3.8 billion predecessor, Private Equity International has learned.

Affinity Asia Pacific Fund V and Carlyle’s Asia buyout fund – also with a $5 billion target – are the two largest pan-Asian funds launched so far this year, followed by Blackstone, which is looking to collect $2 billion for its first pan-Asian dedicated fund, and Morgan Stanley Partners, which is seeking $2 billion for its latest Asia vehicle.

Affinity declined to comment on fundraising.

The firm will follow the same strategy for Fund V as with the firm’s previous funds, targeting buyouts and growth capital in consumer-related industries, healthcare, TMT and financial services across the Asia-Pacific region.

The firm expects to have roughly the same investor base as Fund IV but also seeks commitments from new investors, according to a source with knowledge of the matter. LPs from North America accounted for slightly over 40 percent of commitments for Fund IV; Asian investors, 28 percent; Middle East LPs, 15 percent; while European investors also contributed roughly 15 percent to the fund.

With regard to the type of LPs, the source added that Fund IV received more than 40 percent of its commitments from public pension funds, close to 30 percent from sovereign wealth funds, 15 percent from financial institutions and 10 percent from funds of funds.

Limited partners in Fund IV include the Washington State Investment Board, Michigan Department of Treasury, New York State Common Retirement Fund, New Mexico State Investment Council, and AlpInvest Partners, according to PEI data.

As of 31 March 2017, 2004-vintage $700 million Fund II, which has been fully realised, delivered a 1.9x net multiple and 28 percent net IRR. Meanwhile $2.8 billion Fund III, which is fully invested and 70 percent realised, generated a 1.5x multiple and 11 percent IRR. Fund IV on the other hand is 60 percent invested and is showing a 1.5x multiple and a 26 percent IRR, according to LP documents.

Recent deals from Affinity include the acquisition of Australian clinical and practice management software provider MedicalDirector for A$155 million ($123 million; €102 million) and Burger King Korea for $170 million.

The buyout specialist, which manages over $8 billion of assets, spun out from UBS Capital Asia Pacific in 2004.