Weekly digest - June 22 2022
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22 June 2022
COVER STORY
Asia’s sparse placement agent scene is fleshing itself out despite macro headwinds, but the model is being revised to adapt to a changing market.
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LP INTERVIEW
HYWIN HOLDINGS ON CHINA PRIVATE WEALTH
 US-listed Hywin Holdings is plugging China’s rich into private asset classes one handshake at a time despite increasing digitisation in this wealth migration theme. PE is a fast-growing slice of the pie.FUND FOCUS
LPs ENDORSE POTENTIA'S SOFTWARE THESIS
 Potentia Capital took just four months to close its second fund on USD 438m, emphasizing the growing appeal of B2B technology opportunities in Australia and New Zealand.DEAL FOCUS
TH CAPITAL IDENTIFIES KEY NICHE IN ENERGY STORAGE
 Zhongchu Guoneng Technology is leading China’s push into compressed air energy storage as a means of harnessing fast-rising yet unstable wind and solar capacity. Tsinghua Holdings Capital is among the backers.DEAL FOCUS
PAKISTAN'S DASTGYR ASPIRES TO EMULATE ALIBABA
 SOSV sees parallels between the e-commerce awakenings in Pakistan and China, though 20 years apart. Dastgyr has positioned itself at the fore, but it wants to be asset-light rather than asset-heavy.DEAL FOCUS
SOFTWARE COMBINED SEES SENSE IN AGGREGATION
 Backed by majority owner Navis Capital Partners, Australia-based Software Combined wants to reach up to USD 35m of EBITDA within three years through acquisitions of smaller B2B players. |
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By the Numbers
AVCJ RESEARCH
AUSTRALIA & NEW ZEALAND IN SIX TRENDS
To coincide with this week's AVCJ Australia & New Zealand Forum (see here or the full special issue) ...
Bifurcation in fundraising: With more than half of 2022 still to run, nearly USD 2.6bn has been committed to buyout funds, helping propel overall fundraising total past USD 3.3bn. That is already comfortably more than the USD 2.6bn raised in 2021. Much depends on which managers are in the market. BGH Capital emphasized the gap between “haves” and “have nots” in fundraising, taking less than six months to reach a final close of AUD 3.6bn (USD 2.6bn) in early March. The rise and fall of Canva? Valuation markdowns of Australia-based design and collaboration platform Canva by T. Rowe Price and Franklin Templeton demonstrated how the public market sell-of in tech stocks is filtering through to private markets. Canva is a poster child for pandemic-driven uptake and a key asset for several local VC firms. Experiences in other markets suggest that markdowns by mutual funds do not necessarily inflict lasting harm. Utilities dominate deal flow: In the first three months of 2021, when private equity deal flow in Australia rose quarter-on-quarter while every other major market in Asia regressed, hospitality and healthcare were in the ascendency. These are widely viewed as defensible sectors in an uncertain market. Invariably, though, whenever headline PE investment hits a peak, it is driven by a handful of infrastructure and utilities deals. Nearly half the record USD 50.1bn deployed last year went into this area. Devil in the definition (of infra): EQT’s USD 1.67bn acquisition of a majority stake in cancer care provider Icon Group – through its infrastructure fund – is just one example of how the line between private equity and infrastructure is blurring. It is not unusual for businesses with fixed assets to be reclassified as they are de-risked, but infrastructure GPs are stretching the definition of core-plus, driven by in part by low interest rates and ample liquidity. They see PE firms as sources of – and rivals for – deal flow. IPO markets favour technology: Until recently, at least, public market investors in Australia and New Zealand prized one sector above all others: technology. Despite intermittent pandemic-related lockdowns, PE-backed IPOs staged a resurgence in 2020 with USD 2.5bn raised through 16 offerings. It continued in 2021, which saw 15 companies raise USD 2.7bn. More than a dozen of the IPOs in 2020-2021 involved technology companies. Healthcare, the next most prolific sector, only saw six. Alternatives managers for sale: EQT’s acquisition of Baring Private Equity Asia and PAG filing for a Hong Kong IPO have grabbed the headlines in terms of GP-level M&A. Two smaller transactions in Australia received less attention: Five V Capital selling a 25% GP stake to Pinnacle Investment Management Group and the acquisition of New Forests by Mitsui & Co. and Nomura Holdings. Deal flow is likely to remain intermittent, but there remain willing buyers and sellers beyond the realm of the large-cap GPs. 
All of the trends featured here were sourced from AVCJ's proprietary database, AVCJ Research, featuring comprehensive information on private equity deals, fundraises and exits.
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