Large-cap vehicles support PE fundraising revival in second quarter

Even though the headline total increased, the number of partial and final closes fell to 76 from 87 in the previous three months. Two-thirds of the capital raised went to three funds: the latest pan-regional vehicles from MBK Partners and CVC Capital Partners, which closed at $6.5 billion and $4.5 billion, respectively; and the National SME Development Fund, a Chinese government guidance vehicle that achieved a first close of RMB35.7 billion ($5 billion).

Much like the significant final closes in the first quarter, LPs did most of their work on MBK and CVC before the coronavirus pandemic brought international travel to a standstill. Re-ups – which often get waved through despite investors being unable to conduct on-site due diligence – were another key factor. MBK is said to have achieved a re-up rate above 90% among an 80-strong LP base. 

Similarly, there was a staggering revival in private equity investment, which swung from a six-year low of $24.4 billion in January-March to $54.9 billion in April-June. This is the fifth-highest quarterly total on record.

China was a driving force as deal flow in the country rose from $8.4 billion to $28.7 billion. However, three deals accounted for nearly half the total. They include the $8.7 billion take-private of online classifieds marketplace 58.com, for which Warburg Pincus, General Atlantic and Ocean Link are teaming up with the company’s CEO. It is set to become China’s second-largest PE-backed buyout.

The same concentration effect was apparent in India, where investors committed $9.5 billion to Jio Platforms, a holding company for various internet and telecom assets owned by Reliance Industries. The investor roster reads like a who’s who of private equity. Aggregate deployment for the quarter hit a record-high of $12.5 billion, a 172% increase on the previous three months.

There was no such cause for cheer regarding exits. The $4.6 billion in proceeds represent an improvement on the previous quarter, which ranks as Asia’s worst since 2009, but the number of exits fell from 80 to around 60. PE-backed IPOs held steady, with $9.9 billion raised from 70 offerings – the most since late 2017 – but it was almost entirely a China story. Remove those companies from consideration and only $500 million was raised.

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• Topics
• Fundraising
• Investments
• Exits
• Deals
• Greater China
• North Asia
• South Asia
• Southeast Asia
• Australasia
• China
• South Korea
• India
• Asia