Shifting eastwards

Asian firms are increasingly prominent on our list of the biggest firms in the business – but some traditional private equity strongholds are losing out as a result.

Last week, we published the 2013 PEI 300, our proprietary list of the biggest private equity firms in the world. Compiled by our Research & Analytics team, it ranks managers according to how much capital they've raised for direct private equity investment in the last five years.

Once again, TPG tops the list, despite its five-year fundraising total being almost one-third down on this time last year. And it wasn't the only one with shrinking coffers: all told, the amount of money raised by the 300 firms in the qualifying period was almost 20 percent down on the equivalent figure last year.

It's always fascinating to see in black and white just how much money the biggest firms – with their extraordinary fundraising machines – have managed to accumulate, especially since this is the first year when boom-era 2007 vintages didn't count towards the totals.

But the most interesting thing about the PEI 300, as far as we're concerned, is what it tells us about capital flows (and thus LP sentiment) over time.

Back in 2009, for example, there were 24 Asia-based firms in the PEI 300 list, accounting for about 4 percent of the total capital amassed by the 300 in the preceding five years. This year, there were 53 Asia-based firms, accounting for about 10 percent of the total capital raised by the collective group. That's a big jump, and demonstrates very clearly that firms in the region have been attracting a greater share of investor capital in the last few years.

One notable example is Hong Kong-based RRJ Capital, the biggest climber on this year's list (up 113 places to no. 48). It didn't even exist in 2009; but since its foundation in 2011, it has already amassed $5.8 billion. LPs clearly believe that the excellent credentials of its team – led by Richard Ong, the former head of Asia investment banking at Goldman Sachs, and his brother Charles Ong, previously the chief investment officer of Singaporean sovereign wealth fund Temasek Holdings – makes the firm an attractive way to tap into the China growth story.

But just to highlight China’s new-found financial muscle, RRJ is only the fourth highest China-focused group on the list behind China Investment Corporation, CDH Investments and Hony Capital.

So who’s losing out, as more money flows towards China? Well, the UK, for one. In 2009, there were 35 UK-based firms on the list, accounting for 15 percent of the total capital raised by the PEI 300. This year, there are only 21 firms, accounting for 8 percent of the total raised. In real terms, the 5-year fundraising total for UK firms has fallen from $204 billion to $93 billion. A very clear illustration of how times have changed – and continue to change.