Asia PE fundraising slumps to $13b in first half of 2013

Continued deterioration in the China market was inevitably a contributing factor to the region-wide decline. China-focused vehicles drew $6.5 billion between January and June, down from $8.9 billion in the second half of 2012. This is substantial drop from the peak of $27.8 billion reached in the second half of 2011 when investor appetite for renminbi-denominated funds was strong.

Local currency vehicles attracted $4.8 billion in the first half of the year, compared to $19.8 billion in the second half of 2011, although the numbers for US dollar funds are equally uninspiring - $1.7 billion was raised between January and June, down from $7.9 billion in the second half of 2011.

Asia's fundraising numbers were also weaker due to a paucity of announcements from the large pan-regional players - Affinity Equity Partners reached a first close of $1.5 billion on its fourth fund, but that was about it. Although fundraising conditions are tough, this doesn't necessarily reflect the level of investor interest, with a number of Asia-focused vehicles currently in the market and attracting capital.

Indeed, KKR has yet to announce a final close on its second regional fund - assuming the $6 billion target is reached, it will be the largest-ever Asia-focused PE vehicle - but AVCJ understands it is done bar sign-offs on legal documentation. An official disclosure is expected in the next few weeks.

At $27.8 billion, the private equity investment total is the lowest since the first half of 2010, but it doesn't represent a substantial drop from July-December 2012 and the gap may narrow as previously undisclosed deals emerge. While growth transactions were down once again on a six-monthly basis - largely due to a drop-off in China amidst ongoing uncertainty about IPO exits - buyouts performed reasonably strongly.

On a geographical basis, Australia and India both saw increased investment activity from the second half of 2012, but Japan and South Korea both weakened, in addition to China.

As for exits, private equity firms racked up aggregate proceeds of $21.5 billion in the first half of the year, down from $34.2 billion in the previous six months. Trade sales fell by one third to $12.6 billion, but the impact of infrequent mega deals in a still relatively patchy M&A market shouldn't be underestimated.

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• Topics
• Fundraising
• Investments
• Exits
• Asia
• Fundraising
• buyout
• Growth capital
• Exit
• Trade sale