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China-ASEAN to triple fund size in 2012

Private equity firm the China-ASEAN Investment Fund will next year raise a fund up to three times the size of its current $1bn fund dedicated to Southeast Asia, as LPs look to increase their exposure to the region.

The China-ASEAN Investment Fund plans to raise up to $2 billion or $3 billion in a new Southeast Asia focused fund during the second half of 2012, according to Ryan Chung, associate director of the firm’s backer the Export-Import Bank of China. 

First, the firm will deploy its $500 million remaining in dry powder, having already invested $400 million of its current fund in four companies in Thailand, the Philippines, Cambodia and Laos since its maiden investment in December 2010. 

China-ASEAN declined to comment on future investment plans. 

The China-ASEAN fund boasts investors such as the China Investment Corporation and the International Finance Corporation, which joined as a cornerstone investor in May this year. It was set up in 2009 as the first Southeast Asia-focused private equity vehicle approved by China’s State Council. 

The Philippines, Thailand, Cambodia and Laos are not typically the most popular destinations for private equity investors. However, some firms are finding success in these economies. In August, managing director at Lombard Investments, Pote Videt, spoke to PEI about a busy year spent exiting some of its investments in the second largest economy in Southeast Asia, Thailand. 

He said of the region: “We’ve been able to find highly rewarding opportunities backing fast-growing, middle market companies needing fresh capital and seeking to increase their competitive advantage. If you are a local PE team, this can lead to becoming a repeat, long-term partner for strong business families who own market leading companies, often considering expanding offshore.”

In April this year, PEI revealed that Dubai-headquartered private equity firm Abraaj Capital would open an office in Jakarta “within a year” following its recent move into Singapore. 

Omar Lodhi, senior partner and chief executive of the group’s Asian arm told PEI, “Countries like Singapore, Malaysia and Indonesia, and even other ASEAN [Association of South East Asian Nations block countries, offer significant growth potential.