First close imminent for Bain Asia fund

Bain Capital is nearing a first close for its second Asia fund, the first for which Bain has offered two fee options to LPs in order to attract capital in a tough fundraising market.

Bain’s second Asia fund expects a first close by the end of this month that will surpass the 50 percent mark, according to a source with knowledge of the matter. The fund has a target of $2 billion, double that of its previous fund for the region. Bain declined to comment on the fundraising.

The Bain Capital Asia Fund II is the first from Bain that has offered investors fee options. Investors may choose between a 30 percent carry with a 1 percent management fee, or a more typical 20 percent carry with a 2 percent management fee. A source said it was too early to tell which structure would be preferred. 

So far, the only confirmed investor is the Pennsylvania Public School Employees' Retirement System, which has committed $100 million to the fund. PPSERS could not be reached for comment. 

A person close to the situation confirmed that as usual, Bain will be the single large investor in its own fund, with most likely up to 10 percent of the capital coming from professionals at Bain itself. 

The fund has a similar mandate to its predecessor, and will invest in Asia – largely China and Japan. It has also added India, however will not look to Southeast Asia, Korea or Australia to invest. According to due diligence notes on the PPSERS website, the fund will make investments of about $50 million to $1 billion per deal. 

A source has said most deals in Asia are growth capital therefore would be at the smaller end of that range. However, if a deal is particularly large, it is likely capital will be invested from both the global fund and the Asia fund, a fairly common structure for Bain. In October, the firm acquired Japanese restaurant chain Skylark in a $2.1 billion deal – Japan’s biggest buyout in two years.

Bain is still investing from its first Asia fund, which as of 30 June this year had generated a 1.6x capital return and a 24.8 percent IRR. Bain is not the only Western private equity firm setting its sights on Asia, with big players such as KKR and TPG Capital raising significant new funds for the region.