GPs see strong Asia deal flow despite macro headwinds - AVCJ Forum

"We have completed some large deals in Japan and we also see more transactions coming out of Australia, Southeast Asia and Korea," Jim Hildebrandt, managing director at Bain Capital Asia, said during the opening panel at the 2012 AVCJ Forum.

While the US is still Bain's largest market, Asia now accounts for 20% of global deal flow and Hildebrandt expects this to reach 30% in due course.

Speaking about the IPO market, H. Chin Chou, CEO at Morgan Stanley Private Equity Asia, said he expects a rebound, although not a replication of the seven years of uninterrupted growth seen between 2004 and 2010.

"The market will come back, but what was unusual about the last cycle was how long it lasted and we won't see that again," he said. "Normally it is three years on, three years off."

Chou expects Asia's IPO market to be among the top performers globally but he warned of the risks involved in basing a portfolio company's capital structure on going public within a certain period. Managers should prepare themselves for exits to strategic investors and other private equity firms that are keen to boost their business in Asia.

Hildebrandt agees that, while multiples exposure is still available in the region, strong deal sourcing and value-add deliver the best returns. "In Asia you have the potential for explosive growth if you execute properly."

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