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Altius: `Select' Asia GPs emerging

Asia’s fund managers are splitting into the best and all others.

Despite the general lack of distributions in Asia, “a select group of Asian private equity managers” distributed more capital in 2013 than the previous year, according to a report from Altius Associates.

These quality fund managers improved the overall Asia figure for return multiples by an average of 60 basis points in the first half of 2013 compared to the same period in 2012.

The average realised gross multiple was 2.5 times, according APER data, and when figures are released for the second half, multiples are expected to show a further increase, the report said. 

Improved distributions for some fund managers come in the context of a tough year for realisations from public listings. In Asia, the value of IPO proceeds in 2013 was flat year-on-year at about $3.6 billion, according to separate data from Thomson Reuters.

Proceeds from private equity-backed IPOs accounted for 6.5 percent of Asia’s total IPO value in 2013, a drop from 7 percent in 2012. Asia was the only region to show a decline, and worldwide the percentage increased to 23 percent from 15 percent the previous year.

“While the pace of fundraising and investments has picked up over the past decade, especially in Asia, exits still lag far behind,” said Elvire Perrin, investment partner at Altius, in the report.

The realisation rate on capital deployed in the region has been less than 25 percent since 2007. 

The region's exit environment is highlighting fund managers who can nonetheless return capital to investors, as Asia undergoes a flight to quality, according to Peter Pfister, head of Asia-Pacific at Altius.

Certain GPs in the market with new funds have been oversubscribed and select emerging managers with experienced teams and differentiated strategies have also seen strong investor backing. 

“Manager selection becomes even more critical as the landscape is increasingly bifurcated into the best and non-performing managers, with little grey area in between,” Pfister said. 

According to the report, the challenge for LPs investing in Asia is to remain “highly selective, disciplined and long-term oriented”.