Summer heat

And although the single big iconic buyout deal of the year still appears to be AWOL, market conditions look increasingly favorable for such outcomes in the second half.

Some of the activity may be more prospective than actual – for instance, AIG’s plan toinclude SWFs and private equity investors in the pre-IPO tranche of its planned Asian AIA float is not yet a deal in hand. Nor is Apax Partners and General Atlantic’s participation in Telstra’s float of SouFun Holdings, where their takeup depends on the reception of the PRC real estate portal’s NYSE listing. But activity of this kind is calculated to warm the hearts of GPs and advisors, as things position nicely for a very busy autumn. Even situations with a question mark against them for months, such as ANZ’s participation in the selloff of Lone Star’s KEB stake, now appear to be resolving positively for private equity.

The one cloud in the summer sky, otherwise, appears to be the macro situation. The recent global stock plunge on growth uncertainty suggests, as many have forecast, that the worldwide recovery is by no means assured or firmly established. Such concerns are already affecting GPs’ decisions, as with Pacific Equity Partners’ decision to postpone the IPO of its cinema chain investee Hoyts until 2011. And although the MakeMyTrip IPO on the NYSE achieved a great first-day performance for its VC backers, other listings, even including the Agricultural Bank of China’s record-breaking $22.1 billion dual listing in Hong Kong and Shanghai, have seen only a lukewarm reception that hardly makes the IPO exit route especially favorable, or reliable.

Still, China’s macro rise, the fundamental driver for so many regional investment theses, continues on track, with the region’s new superpower overhauling Japan as the world’s second largest economy. The Land of the Rising Sun, now anything but rising, meanwhile could offer some interesting prospects, purely because it is now being written off by so many macro trend-followers. More astute private equity investors are already taking bets that some of China’s new wealth might seek to find its way into those attractive, underperforming and undervalued assets on its doorstep.

AVCJ’s two-week break wasn’t much of a break, as it turned out. And the next few weeks and months seem likely to be even busier.

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• Topics
• Performance
• Apax Partners Hong Kong
• General Atlantic
• Lone Star Funds
• Pacific Equity Partners