Although deal flow remains robust, evidencing the view held that there are good companies to buy in Asia at compellingly low prices at present, the latest research reveals that fundraising by Asian private equity firms fell by almost 70 per cent in 2002.
The total raised last year fell from just under $10bn ($9.92bn) in 2001 to $2.99bn for the year, according to data published by the Asian Venture Capital Journal. However, the global downturn did little to stifle investment in Asia, which at $10.45bn was only seven per cent on the $11.23bn invested in 2001.
Major funds that closed in the past year included the Carlyle Group’s Carlyle Asia Venture Fund with $170m and Baring Private Equity Partners Asia’s second pan-Asian fund, which closed below its original $350m to $400m target at $257m.
The sustained level of Asian private equity investment was underlined by a steady flow of buyouts, which accounted for 53 per cent of deal flow. The largest of these was the $1.5bn acquisition of South Korea-based Kumho Tire by Carlyle and JP Morgan. Telecommunications (27 per cent), financial services (19 per cent) and heavy manufacturing (17 per cent) were the three principal areas for investment.
The latest report also takes into account the level of exits in the region. Around 40 major exit transactions were recorded in 2002, with a total value of $5.65bn. Notable deals included the H&Q Asia Pacific consortium’s sale of Good Morning Securities, UBS Capital offloading SDL Leasing and Goldman Sachs and Barings Asia’s sale of their stake in Kookmin Bank.
In terms of investment, 2003 has begun in the same vein as 2002. Last week, US-based private equity firm Lone Star reached agreement to acquire South Korean company Kukdong Engineering & Construction in a $206m buyout. Also last week, Warburg Pincus announced an expansion of its Asian operations, opening its first offices in China.