GP raise less for Asia in 2013

After a couple of years of subdued conditions, 2013 was the year when fundraising levels started to look buoyant again.

Across the year, 599 funds collected a combined $385.6 billion, according to PEI’s Research & Analytics division. That’s not only a sizeable jump from last year’s total of $301.1 billion; it’s also by some distance the highest total since the good old days of 2008.

Totals were up in almost every geographical category. Large, globally-focused funds raised $139.6 billion, up from $128.3 billion in 2012 and $77.8 billion in 2011. North-American focused funds fared even better, in relative terms, raising $124.5 billion – up from $89.9 billion in 2012 and $75.4 billion in 2011. And pan-European funds collected $42.7 billion, up from a meagre $13.5 billion the previous year.

But there was one notable exception. In the Asia-Pacific region, fundraising levels fell to $27.6 billion in 2013, down from $29 billion in 2012 and $62 billion in 2011. Of the top ten funds raised in 2013, only one was focused on Asia; Kohlberg Kravis Roberts’ $6 billion Asian fund II.

So why is Asia failing to make it onto LP’s shopping lists? Some sources point to unsatisfactory returns from Asia’s most influential market, China. There also seems to be something of a flight to quality going on, where capital is still readily available for the best-regarded firms, and pretty hard to come by for the also-rans – which is arguably a good thing for region. Indeed, given how much money flowed into Asia in 2011 (a whopping $62 billion in fact) this may just be a natural adjustment.

Either way, the good news is that 76 percent of respondents to a recent Ernst & Young study thought 2014 would be a year of “vigorous deal activity” in Asia-Pacific. And with the IPO markets finally opening up again, some of that exit backlog may be resolved too – which should boost fundraising in future years.