Asia-Focused Buyout Funds on Path for Record Fundraising

Since 2011, Asia-focused private equity fundraising has declined, with aggregate capital secured by funds closed in 2016 reaching US$66 billion, a 26% decrease from the $89bn raised in 2014.

However, while Asia-focused buyout funds experienced a decrease in fundraising in the same time period, 2017 seems to be on course for a record fundraising year, according to the Preqin 2017 Asia Private Equity Report.

Asia accounts for 15% of the global private equity fundraising over the last 10 years. Greater China remains the hub of private equity in Asia, accounting for 44% of buyout deal value in the region since 2010.

Buyout funds account for the largest proportion of aggregate capital raised by Asia-focused funds. As of August 2017, Asia-focused buyout funds have raised $23bn, almost reaching the record $24bn secured by buyout funds for the whole of 2014.

This is largely due to the closure of two vehicles in 2017: the KKR Asian Fund III which secured $9.3bn, and the Guoxin Fund 1 which secured CNY 50bn ($7.2bn).

The largest buyout fund in market, Asian Institutional Investor Joint Overseas Investment Fund, has a target size of $10bn and is seeking to become the largest Asia-focused buyout fund ever.

As a result, dry powder available to Asia-focused fund managers sits at a record $144bn as of December 2016, with buyout funds accounting for 32% of total Asian dry powder.

However, buyout deal activity in Asia has slowed in recent years. 2016 saw $34bn in deals made, 32% less than the $50bn recorded in 2015.

Nonetheless, in 2017 YTD, buyout deal value in Asia has reached $18bn, putting it on course to approach 2016’s level of activity. 

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