Baring targets $8.5b for eighth pan-Asia fund

The compressed timeframe is a consequence of a protracted process last time. Baring launched Fund VII in early 2018 and a first close of $4.5 billion came later the same year. It reached a final close at the end of 2019, having extended the fundraising period by six months to accommodate certain investors.

AVCJ learned of the target for Fund VIII from two sources close to the situation. Baring declined to comment on fundraising.

The launch comes in the wake of two partial exits and one liquidity event for Fund VII. Baring recently agreed to sell the surgical devices division of Lumenis, an Israel-headquartered company that counts Asia as its largest market, to Boston Scientific for $1.07 billion. The GP – which bought Lumenis for $1 billion in 2019 – retains the aesthetics and ophthalmology operations.

This followed a $3.48 billion Hong Kong IPO for JD Health, an online-to-offline healthcare platform spun out from China’s JD.com last December. Baring participated in a $1 billion funding round for the company in 2019 at a valuation of $7 billion. JD Health currently has a market capitalization of around $45 billion.

The second partial exit was from Indian IT solutions business Coforge last October. Fund VII has distributed approximately $2 billion to date and has an IRR of more than 50%, according to a third source close to the situation.

Baring has scaled up in fund size with each vintage, having raised $2.46 billion and $3.98 billion for its fifth and sixth vehicles. Nevertheless, speaking to AVCJ after the close of Fund VII, Jean Eric Salata, Baring’s CEO and founding partner, said he felt the vehicle was undersized.

“I wish we had a bit more capital to work with over the next few years,” he said. “You can look at the rest of the world as a guidepost for where we’re heading. There’s no logical reason why fund sizes, or deal sizes, should be any different in Asia from what they are in Europe or the US. It’s just a question of the evolution of the industry and the market. In terms of the size of its economy, Asia is already larger than those markets.”

Several of Baring’s peers are following a similar fundraising path. As of last September, KKR had secured $13.1 billion for its fourth Asian fund, surpassing the $12.5 billion target. It raised $9.3 billion for Fund III. Hillhouse Capital is also in the market, seeking $13 billion across buyout, growth and venture vehicles. The firm raised $10.6 billion for a single fund in the previous vintage.

Baring focuses on mid and large-cap buyouts across Asia as well as targeting global companies that can benefit from further Asian exposure. Favored sectors include healthcare, education, IT services, business services, financial services, consumer, and advanced manufacturing.

Investments in 2020 included privatizations of two Indian IT services providers, Hexaware Technologies and Virtusa. It also backed Chinese online education platform Codemao, Korea’s Shinhan Financial Group, and India’s RBL Bank. The existing portfolio wasn’t immune to the impact of COVID-19, with UK lifestyle retailer Cath Kidston restricted and the China assets of Wall Street English sold back to the original founder.

A second IPO, involving business process outsourcing specialist Telus International – a Fund VI portfolio company – came in February. Telus raised $1.06 billion in the US, with existing investors, including Baring, realizing proceeds of $538.8 million.

According to Pennsylvania Public School Employees' Retirement System (PSERS), Baring's sixth fund had delivered a multiple of 1.31x and an IRR of 11.6% as of June 2020. This compares to 1.31x and 6.7% for Fund V, 1.62x and 8.8% for Fund IV, and 2.34x and 52.2% for Fund III.

Founded in 1997, Baring has more than $21 billion in committed capital and over 190 professionals across offices in Hong Kong, Shanghai, Beijing, Tokyo, Singapore, Sydney, Mumbai, New Delhi, and Los Angeles. It has real estate and India credit strategies in addition to private equity.

 

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• Topics
• Buyout
• Fundraising
• GPs
• Greater China
• South Asia
• Southeast Asia
• North Asia
• Asia
• Baring Private Equity Asia