Baring Private Equity Asia has closed its fifth fund on its hard-cap of $2.46 billion, only five months after its launch in late July last year.
The fund, originally launched with a $1.75 billion target, was oversubscribed even at its first close in late October, early November, according to one source, and ultimately ended up being over-subscribed to the tune of $1 billion, according to a statement from the firm.
“That was a good problem to have,” Jean Eric Salata, BPEA’s founder and CEO said in a telephone interview today. “We’ll probably never have that problem again.”
Salata attributed the speed and success of the fundraise to the macro-economic situation, which put Asia at the top of the wish-list for many LPs around the globe, as well as LPs wishing to back firms that had established a track record through different market cycles.
[$1bn over-subscription] was a good problem to have. We'll probably never have that problem again.
“Very few firms are on their fifth fund [in Asia],” he noted.
The Baring Asia Private Equity Fund V was the largest fund to have been launched in Asia since the global financial crisis struck, and the second largest to have closed in that time. It has been outpaced only by The Carlyle Group's third buyout fund, which closed on $2.55 billion in 2010, short of its initial target of betwen $3 billion and $4 billion.
There were around 70 investors in the Baring Fund V, said Salata, which included 30 new investors. According the BPEA statement, about 47 percent of the commitments came from North America 25 percent from the Middle East and Europe and 28 percent from Asia. The Asian representation was, said Salata, the highest ever, due in part to “a number of sovereign wealth funds in the region investing for the first time”.
New investors include the Teachers’ Retirement System of the State of Illinois, which committed $100 million, and the Arizona Public Safety Personnel Retirement System, which committed $60 million. One returning LP is the Pennsylvania Public School Employees’ Retirement System, which has committed up to $200 million. UBS was the fund's placement agent, as it was for Funds III and IV.
In terms of investment plans, Salata commented that there was often an “inverse relationship between how easy it is to raise money and how attractive it is to invest at that time”.
“Right now, I wouldn’t say it was the market was that attractive from an investment standpoint in terms of valuations. There is attractive deal flow, but the pricing has gotten high,” he stated.
With that in mind, Salata said BPEA would be “patient” and wait for the cycle to “play out”. In the meantime, he added, the firm would maintain an active focus on divestments.
Growth-focused BPEA closed its fourth fund on $1.52 billion in February 2008. The fifth fund will follow the same strategy, described by Salata as “fairly opportunistic”, given its remit to explore cross-sector investment opportunities in Greater China, India, Japan, Singapore, South Korea or South East Asia.