Asia fundraising surpasses EM peers

Fundraising for Asia is matching that in Western Europe and outpacing emerging markets.

Private equity funds in Asia Pacific are raising substantially more capital than their emerging markets peers and starting to compete with developed markets in terms of the amount raised, according to new figures released by Private Equity International’s Research & Analytics division.

In Q1 of this year, Asia Pacific funds raised $9.7 billion, 47 percent more than the $6.6 billion raised by Western European private equity funds, and a far cry from the amounts raised by other emerging markets.

Latin America, Middle East, Africa and Central and Eastern Europe raised a combined amount of just $2 billion during the quarter. Pan-European funds raised just $4.2 billion.

Asia-based funds also made up two of the top five largest private equity funds closed during Q1 – the $3.8 billion pan-regional vehicle by Affinity Equity Partners and the $2.55 billion China fund closed by CDH Investments.

While the figures show funds closed in the first quarter of 2014, yearly data reflects the same trend.

In 2013, Asia Pacific funds raised $29.7 billion, 77 percent more than the $16.8 billion raised by the other emerging regions combined, PEI's data showed.

Latin America, which has previously been popular with investors as an emerging private equity region, raised just $3.1 billion during 2013, down from the $8 billion and $11.1 billion GPs there raised in 2012 and 2011 respectively.

“Out of all [emerging] markets, Latin America has lost a lot of its shine. So if you’re doing a peer-to-peer comparison, Asia needs to be compared to North America and Europe [rather than emerging markets],” Vince Ng, partner at placement agent Atlantic Pacific Capital, told PEI.

“Asia now features in the majority of people’s portfolios and probably will continue to feature. As a broad region, I think that shows the maturity and depth of the market and the consistent need for exposure to the region.”

However, Ng adds that markets within Asia have fallen out of favour with LPs – notably India – while China and Southeast Asia continue to attract investors.

Overall, figures from PEI's Research & Analytics division indicate that fundraising by private equity started strong in 2014, although the $67.8 billion collected by GPs globally was a 13 percent decline from the $78 billion raised during the same period last year.

North America continues to drive numbers, with over $30 billion collected by GPs in the region in Q1, and $140 billion raised last year, beating even the $138.5 billion raised by funds with global mandates. North America-focused GTCR Fund XI was the largest fund raised in Q1 2014 globally, closing on $3.85 billion.

“While 2013 was the year when private equity fundraising finally got out of the doldrums, 2014 looks set to be a year of consolidation. Fundraising has not quite hit the heights of 2013 yet, but our conversations with investors indicate positive sentiment towards the asset class and, with over 1,800 funds currently on the road, we expect to see a similar full-year result this year to last,” Dan Gunner, director of Research & Analytics at PEI, said in a statement.