In 2013, just ten Asia-focused private equity funds raised $19.7 billion, which represents 70 percent of the total $27.6 billion raised for the region, according to data from Private Equity International’s Research and Analytics division.
The 2013 data is somewhat distorted by Kohlberg Kravis Roberts’ record $6 billion Asia fund, which closed last year. However, excluding KKR’s vehicle, the top ten funds raised $13.9 billion or 50 percent of total capital raised in 2013.
Javad Movsoumov, executive director at UBS private funds group in Singapore, believes the LP base may be a factor.
In Asia, the large LPs that write big cheques for fewer funds – such as North American pension funds — are flush with capital from public market and private equity returns in the US. The investors in Asia’s smaller, sub-$1 billion funds tend to be funds of funds, which have not raised capital as quickly as they struggle to differentiate themselves.
“These two groups haven’t increased their capital base at the same pace,” Movsoumov says.
Nonetheless, more capital has been going into fewer hands since 2010, when ten Asia funds raised 31.7 percent of total capital.
ASIA'S TOP 10 FUNDS
|% of total capital|
|2013||70% (50% ex-KKR)|
Most industry sources cite a flight to quality, with capital flowing to GPs perceived as strong performers and trickling to everyone else.
Ke-Ling Koh, PEI’s research and analytics manager, pointed out that currently 421 Asia-focused funds in the market are seeking an aggregate of $163 billion.
“With fundraising in Asia remaining very competitive, and LPs gradually shifting toward directs and separate accounts, we might witness more bifurcation of the PE asset class going forward – some funds struggling to close while others do very well. It’s a case of fewer funds raising more capital.”