Asia’s private equity market is beginning to mirror that of the US and Europe, as deals begin to hit the $1 billion (€757 million) range and international growth strategies are sought, said Joseph Bae, head of Kolhberg Kravis Roberts’ Asia investment team.
Speaking at the annual SuperReturn conference in Frankfurt, Bae said he expects leading businesses in India, China and Japan, particularly, to pursue cross-border expansion, according to a Reuters report.
“I think the leading Japanese companies are keenly focused on expanding outside of Japan and they’re looking for top-line revenue growth,” he said. “I think people overlook to some degree the impact a resurgent Japan is having in the region. Japan is clearly not a high-growth market, but a 2 to 3 percent growth in Japan is just as significant from a dollar standpoint as 4 to 5 percent of extra growth in China.”
Bae said a major trend in Asia is one that’s well-established in the US and Europe: As large conglomerates face growing shareholder pressure to sell divisions or subsidiaries not considered core parts of the business, private equity firms acquire them.
“Private equity in Asia is developing more in terms of a traditional buyout market, where investors focus on operational improvement and long-term investment,” he said.
The Carlyle Group, Warburg Pincus, Texas Pacific Group and Permira are among the large international private equity firms already active in the region.
KKR is currently raising $4 billion for its first Asian-focused fund, which is expected to close later this year.
According to Bae, Reuters reported, KKR’s portfolio companies in the region have combined revenues of $10 billion, 65,000 employees, 50 manufacturing plants and more than 25 joint ventures.