Asia’s debut funds at five-year low

Capital raised by new fund managers was down by half last year to $1.8bn.

First-time fund managers in Asia raised only $1.8 billion last year, down by about 50 percent year on year and the lowest amount since 2009, according to Private Equity International’s Research and Analytics division.

The data excludes RMB funds and real estate vehicles. 

The numbers represent a multi-year slide since 2009, when 20 funds raised only $987 million.

Debut funds are also raising less in relation to the larger fundraising pie. They comprised about 6.5 percent of Asia’s total fundraising last year, which was $27.6 billion. In 2012, they raised 11.7 percent of the total.

Asia's First-Time Funds 

  Amt raised    Number
2013   $1.8bn   11
2012   $3.4bn   17
2011   $6.8bn   25
2010   $4.6bn   42
2009   $987m   20

“LPs have less of a risk appetite this year so far, though that may change quickly,”  said Conrad Yan, partner at Campbell Lutyens in Hong Kong. 

Nonetheless, that’s due to macro issues, which are not the prime consideration when looking at first-time mangers, where the concerns are about team cohesion and differentiated strategy.

“Raising a first time fund is always difficult,” he said, adding that the current climate didn't necessarily make it even harder. 

“2013 is probably the year when LPs feel quite comfortable with the US and Europe again.”

To raise a maiden fund, it helps to have a pedigree, investment experience, the right connections, and to be in a market that’s not too crowded, he said. 

In fact, those funds that closed maiden vehicles tended to have a pedigree and previous track record. For example, India-based Kedaara Capital, which raised $540 million, and Korea’s Anchor Equity Partners, which raised $500 million, have founding partners from Temasek and Goldman Sachs, respectively. 

The founders of Singapore-based KV Asia, which closed on $263 million, have prior experience at Standard Chartered and JPMorgan.

Yan added that a lot of potential fund managers don’t make it from idea to fund close. 

“Once a fund manager raises the first fund, the survival rate is high. But if you’re talking about conceiving an idea of raising a fund to actually raising one, survival is quite low.”