Looking back: Asia in 2017

The year delivered strong exits for GPs, increased dealflow in Japan, South Korea and Australia as well as a pick-up in fundraising.

Asia-Pacific saw a year of strong private equity fundraising and cross-border transactions in 2017, particularly in developed countries.

According to PEI data, 72 Asia-focused funds raised $33 billion from January to the first week of December, compared with 81 funds and $18 billion in the previous year. KKR amassed $9.3 billion for the region’s largest ever private equity fund, with most of the capital to be deployed in corporate carve-outs in developed Asia.

Carlyle, Blackstone, Morgan Stanley Private Equity, TPG and Affinity Equity Partners are also in market with their multi-billion Asia-focused vehicles.

Jie Gong, a partner at Pantheon, observed an increase in specialist funds. “We have seen a pickup in healthcare funds this year,” she said. “Generally speaking the market is moving towards further specialisation, a reinforcement of what has started about three years ago.”

On the deal front, market sentiment has shifted, and pan-Asian funds have stepped up investment activity in Japan, South Korea and Australia. KKR struck more than $6 billion worth of deals in Japan this year. Bain Capital made headlines with its record-breaking $18 billion acquisition of Toshiba’s memory chip unit. TPG re-entered South Korea with its $437 million investment in Kakao Mobility. And Australia saw big-ticket transactions with The Carlyle Group and Pacific Equity Partners’ $900 million acquisition of iNova Pharmaceuticals as well as Queensland Investment Corporation and Pagoda Investments which purchased Icon Cancer Care for more than $750 million.

“It’s important to note that the GDP growth in Asia’s main economies remains to be healthy,” said Mingchen Xia, a managing director at Hamilton Lane. “And in this type of environment, it’s easier to make deals because the outlook and expectation of sellers and buyers is positive, it’s fairly easy to reach an agreement on price. We’ve also seen faster investment pace, which itself is a driver of fundraising.”

2017 has also been a strong year for exits, driven by the stronger IPO markets in the US and Hong Kong as well as robust activity in trade sales.

Xia added that Hong Kong’s IPO market has particularly opened up to technology companies from China. “The retail investors have come back, partially driven by Stock Connect, which allows international and mainland Chinese investors to trade securities in each other’s markets.”