Private Equity deal-making activity in Asia Pacific, excluding Japan, continued to decline in 2013 with firms closing 900 deals totaling US$11.4 billion in disclosed private equity investments, a 45.8% decline from the comparative period in 2012, and the lowest annual period for private equity investments in the region since 2005 (US$8.8 billion), according to Thomson Reuters.
Chinese companies continued to be the biggest beneficiaries of disclosed private equity investments in Asia Pacific which attracted US$4.5 billion worth of deals from 198 firms, a 46.8% decline in deal flow from 2012, and represented 39.3% of the regional market share. India followed second with US$3.0 billion, down 36.9% from last year, and captured 26.8% of the market share.
Private equity investments in selected Southeast Asian countries grew. Singapore, Malaysia and Philippines witnessed 24.6%, 168.5%, and 440.1% increase in disclosed private equity investments, respectively, compared to last year. However, disclosed private equity investments in Indonesia dropped 79.4% to US$30 million compared to last year’s PE deal flow.
Australia private equity investments fell 75.6% to US$331.9 million compared to 2012 while New Zealand increased 98.7% to US$180.13 million over last year.
The amount of private equity exits through initial public offerings (IPO) dropped 37.2% with 46 deals raising US$7.9 billion in proceeds compared to US$12.5 billion raised from 103 deals in 2012.
Private Equity exits through IPO of China-based companies accounted for 54.4% of the region’s IPO exit activity and listing 18 IPOs worth US$4.3 billion in 2013, down 52.6% from last year. Since the suspension of IPO approvals in China late 2012, the China A-share IPO market remained quiet in 2013.
The IPO suspension in China’s stock exchanges pushed Chinese companies to tap other equity markets outside China for initial public offerings.
Majority of the Chinese IPO exits listed in Hong Kong Stock Exchange main board with 10 issues worth US$3.4 billion and 1 listed in HK Gem for US$9.3 million. China also issued their IPO exits in the United States exchanges raising US$533.8 million in the New York Stock Exchange and US$341.2 million in NASDAQ.
While IPO exits may have declined, a number of PE firms completed significant private equity exits through Trade Sale, with a combined value of US$6.4 billion, a 100.3% increase from last year.
China accounted for majority of the region’s Trade Sale exit strategy where PE firms carried out 23 deals worth US$3.9 billion, a 367.8% increase in value from last year, and accounted for 60.6% of the region’s trade sale activity.
Meanwhile, Secondary sale reached US$346.1 million, a 51.0% decline from the comparative period in 2012. India saw 3 secondary sale deals worth US$254.4 million, or 73% of the secondary sale exit activity involving Asia Pacific companies.
A Lackluster 2013
The data from Asia Pacific’s private equity fundraising activity reflected a tough environment for 2013, with firms closing 98 funds, a 54% decline from 2012. The aggregate amount of committed capital raised in 2013 reached US$28.2 billion, falling 25% from the amount raised in 2012.
Hong Kong was the primary driver for fundraising activity in Asia Pacific in terms of amount raised with 12 funds closed worth US$12.6 billion in aggregate total, a 46.7% increase from the same period last year when funds raised a total of US$8.6 billion.
China closed at least 38 funds worth US$6.5 billion, a 68.1% drop from 2012. Buyout funds accounted for 55% of the fundraising activity for Asia Pacific private equity funds, with an aggregate amount of committed capital worth US$15.4 billion, a 10.2% decline from last year.