Asian fundraising grinds to near halt

Asian PE has shown a marked downturn both in fundraising and investment although exit opportunities are increasing for the region’s investors.

The private equity fundraising market in Asia has recorded a dramatic fall in the first half of 2002, according to new figures published by the Asian Venture Capital Journal.

In the first six months of 2002, Asian private equity vehicles raised $544m, 85 per cent down on the total generated in the first half of 2001, when $3.9bn was raised. The most notable fund close this first half was Carlyle’s Asia Partners II, which closed on $170m. The fall in investments was less dramatic, recording a fall of 33 per cent to stand at $5.14bn.

South Korea is the notable exception to the downward investment trend, with 36 per cent of the region’s total investment heading there. The other four major recipients of capital investment comprised Japan, Australia, Hong Kong and Indonesia. Conspicuous by its absence from the top five list is China, which despite a broad sentiment of enthusiasm among professionals in the region, only attracted $175m in the first half of 2002.

The biggest cause for optimism in the region is the growing number of successful exits being recorded by investors. Often seen as one of the more challenging regions from which to exit, Asia has this year produced some of the more lucrative returns for investors, most notable of which were Goldman Sachs’ partial multi hundred million dollar partial exit from South Korea’s Kookmin Bank and H&Q’s $200m return on a $30m investment in Good Morning Securities.

“Despite the sobering statistics, many regional players remain bullish about the Asian market and see the consolidation as an opportunity to bring sanity back to the market,” says Scott Thoreau, publisher of the latest data. “Significant exit transactions are bringing confidence back to the market.”