Gap narrows between Asia and Europe funds in market

Asia-Pacific focused funds in market are targeting just under $5bn more than those focused on Europe.

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The gap is narrowing between the amount private equity fund managers are seeking for vehicles targeted at Asia-Pacific and Europe.

From the end of 2014 to the end of 2016, there has been, on average, a $33 billion gap between the amount sought for each strategy, with Asia-Pacific in the lead. However, as of 1 July, the gap has narrowed to just under $5 billion, according to PEI data.

Asia-Pacific focused funds are targeting $92.4 billion, compared with $87.5 billion for Europe-focused funds. The largest vehicle in market targeting the former is TPG Asia VII, which is targeting $4 billion.

In January, New Mexico State Investment Council approved a $100 million commitment to TPG Asia VII. SIC is also an investor in TPG Asia VI.

In aggregate, TPG’s six prior Asia funds have generated a pooled net internal rate of return of approximately 14 percent and a pooled 1.6x net multiple as of 30 September 2016, according to performance data collated by Pavilion and presented at an SIC board meeting in January.

Despite targeting greater sums, since 2013, Asia-Pacific funds have collected less capital than those targeting Europe. The same held true for the first half of 2017, when 43 funds raised $23 billion for Asia-Pacific, compared with 60 funds and $54 billion for Europe.

Globally, 2,464 private equity funds are targeting a combined $647 billion. This compares with 2,342 funds targeting $776 billion at this point last year, and 2,261 funds targeting $770 billion in July 2015.

In the first half of the year, the largest proportion of capital raised – 41 percent, or just over $109 billion – was in funds with a multi-regional focus, while North America funds attracted 29 percent and Europe 21 percent.

However, when it comes to funds in market today, North America far outstrips the rest. Almost 40 percent of the $647 billion sought by fund managers is for North America-focused funds, compared with 30 percent for multi-regional vehicles.

Four of the 10 largest funds in market are North America-focused, including the $10.5 billion Vista Equity Partners VI and Bain Capital Fund XII, which is targeting $7 billion.