Asia takes emerging markets fundraising to post-crisis high - EMPEA

Asia accounted for $50 billion out of the $61 billion raised for emerging markets globally, compared to $36 billion out of $48 billion in 2016. Asia has long been the dominant contributor to these datasets, which means trends impacting this region have a disproportionate impact on the whole.

The prevalent industry dynamic in Asia has been bifurcation, with an ever-larger portion of capital going to a relatively small group of managers, led by pan-regional players. For example, EMPEA’s figures for 2017 include KKR’s $9.3 billion third Asian fund – a vehicle that is active in developed as well as developing markets in the region.

AVCJ Research’s records show that Asia-focused managers raised $97.9 billion in 2017, down from $136.8 billion a year earlier. However, these data include renminbi-denominated fundraising, which has moved the needle significantly in recent years, largely due to government guidance funds. Strip out the renminbi share and the numbers look more like those released by EMPEA.

The high point for emerging markets fundraising remains 2008, when $66 billion was committed by LPs – and $41 billion of that went to Asia. The major change between 2008-2009 and 2016-2017 from a strategy perspective is the diminishing influence of growth capital. Funds pursuing this strategy received 41% of the capital raised in 2008-2009; in 2016-2017, it was 25%.

While the buyout share has hovered around the one-third mark in recent years, venture capital and private credit have seen considerable growth. VC managers received 19% of total capital raised in 2016-2017, up from 16% in 2014-2015 and 8% in 2008-2009. Over the same three periods, the private credit contribution has grown from 4% to 10% and then 12%.

EMPEA also recorded a record high in emerging markets investment, with $49 billion deployed in 2017 compared to $34 billion a year earlier. However, more capital is ending up in larger deals – another trend consistent with AVCJ’s findings for Asia as a whole. Over half of the total capital invested went to deals of $300 million or more, up from 37% in 2016.

Emerging markets private equity activity remains a small portion of the global total. It accounted for 14% and 9% of fundraising and investment dollars, respectively, in 2017.

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• Topics
• Fundraising
• Buyout
• Venture
• Credit/Special Situations
• Investments
• Asia
• Emerging Markets Private Equity Association (EMPEA)