Asia PE investment hits $183b in 2018

China once again accounted for the bulk of investment, and although the $91.5 billion deployed represents a relatively small year-on-year decline, activity slowed markedly in the second half to coincide with the increasingly bleak macro picture. Notably, growth-stage tech investment peaked at $25.6 billion in April-June, before falling to $18.1 billion and $13.6 billion in the next two quarters.

Nevertheless, 2018 still represented a runaway year for private market participation in late-stage rounds for businesses with specializations ranging from ride-sharing to artificial intelligence. These deals attracted $52.4 billion in China, more than three-and-a-half times the 2017 figure. The $14 billion round for Ant Financial was one of 21 deals of $500 million or above, compared to five in 2017.

Growth-stage tech activity across all of Asia accounted for just under one-third of investment, up from 7.7% in 2017. Meanwhile, the buyout share fell from 40% to 27%. The largest transaction was the $3.7 billion acquisition of SK Shipping in Korea, which pales into significance alongside the $18 billion for Japan’s Toshiba Memory Corporation (it closed in 2018 but was announced in 2017).

However, the numbers reflect a broader slowdown in big buyouts in markets such as Japan and China. There were 16 transactions of $1 billion or more in 2017 – only two of them involved energy or infrastructure in Australia – and they were responsible for 28% of overall capital deployed. The statistics for 2018 are 11 deals and 10%.

The pattern of a second-quarter peak followed by a pullback in activity was apparent in PE exits as well as investments. A string of bumper trade sales in the technology space – Flipkart, Ele.me and Mobike – saw exit proceeds for the region surpass $100 billion for the first time, ending the year at $117.1 billion. But the final quarter total of $17.1 billion represents a two-year low. The were around 70 exits during this period, the least since the aftermath of the global financial crisis.

A total of 170 private equity-backed IPOs generated combined proceeds of $45.7 billion, a four-year high. Listings by Chinese companies in offshore jurisdictions, principally the US and Hong Kong, more than compensated a sharp reduction in IPOs on mainland exchanges. However, by the end of the year, uncertainty in global markets brought IPOs everywhere close to a standstill.

The dominant theme in Asia fundraising was brand name managers raising ever larger sums. A total of $139.4 billion was committed to the asset class, falling to $100.8 billion if renminbi-denominated activity is excluded.

The top 10 non-renminbi funds raised – based on incremental and final closes – were responsible for 48% of the total. Eight of the 10 are pan-Asian. Seven were final closes and six of those had previous vintages. The average increase in fund size on the last vintage ranged from 33% to 152%. The top 10 accounted for 50% in 2017, but they were sharing a much smaller pie of $62.1 billion.

If renminbi vehicles are included, Asia fundraising was down slightly from $144.2 billion in 2017. With $38.6 billion in commitments, the Chinese local currency share of was 28%, down from 57% in 2017 and 63% in 2016.

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• Topics
• Fundraising
• Investments
• Exits
• Buyouts
• Expansion
• Asia