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Asia’s FoFs raise only $900m

The annual amount is the lowest in three years.

Asia-focused funds of funds raised $900 million across nine vehicles in 2013, the lowest totals in three years, according to Private Equity International’s Research & Analytics division.

In Europe, by comparison, 10 funds of funds raised $3.2 billion and in North America (including separate accounts) 51 funds raised $9.5 billion. 

 ASIA'S FoF FUNDRAISING 

     2010    2011    2012     2013 
US$bn    $2.7    $1.6    $4.3    $0.9
Number     13     12     12     9

  

The largest Asia-focused fund of funds raised last year was LGT Capital Partner’s Crown Asia-Pacific Private Equity II, which closed on $306 million.

Fund of funds continue to be challenged by lack of differentiation and the justification for the layers of fees they charge LPs. In addition, LPs are strongly focused on returns from the region, which have recently been disappointing relative to the developed markets.

“As the Asian PE asset class slowly matures, the biggest and most important differentiator is going to be returns,” Doug Coulter, head of Asian private equity at LGT Capital, told PEI. “It will no longer be enough to just sell the Asian growth story.”

However, 2014 totals could spike as two large Asia-focused fund of funds, Axiom Asia Private Capital and Asia Alternatives Management, will likely raise new funds this year, according to industry sources.

In 2012, Axiom closed its third fund of funds on $1.15 billion and Asia Alternatives held a final close on $908 million for its third vehicle.