Affinity not raising new fund

"We are not planning to start marketing a new fund in 2010," Affinity chairman and Managing Partner KY Tang told AVCJ. "We are about 50% invested, and there is still quite a lot of dry powder left."

Affinity's previous fund, the $2.8 billion Affinity Asia Pacific Fund III, closed in March 2007, and the firm has since been investing from this vehicle, as well as managing the portfolio investments from this and previous funds. Indeed, Affinity's current focus is far more on portfolio management and new investment than raising new capital.

"Our focus this year is on a number of things," Tang told AVCJ. "We're still spending a lot of time working with our portfolio companies. But what we actually do has changed materially. Last year, it was about ‘battening down the hatches' – streamlining operations, cost-cutting, managing working capital and cash flow, and reducing risk. This year, our focus has changed to initiatives on revenue growth, and how to maximize opportunities from the economic recovery. We have loosened the purse-strings on capex but we want it more targeted and with greater accountability on how it is spent. We are looking at an increased deal flow, and clearly the deal flow for the whole industry has increased this year. We are also working on a number of significant exits. This year, the whole industry in Asia will see a big increase in the volume of entry and exit transactions."

According to Tang, the issue of a new fund "was neither raised nor discussed" when Affinity had its AGM for its LPs and its board of advisors meeting last November.  AVCJ's LP sources tend to confirm Affinity's position on the timing of the investment and fundraising cycle. Global LPs, it appears, are not currently very eager to commit significant amounts to new private equity funds until existing portfolio management has gone further post-crisis and the entire global economy recovers enough to underpin the investment thesis. Furthermore, unlike growth capital and venture funds, buyout funds remain very viable at the 50% invested level, with no pressure to begin follow-on fundraising.

"Some time in the future, of course, we will need to raise Fund IV, but there is no current plan to start fundraising this year," Tang concluded.

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• Topics
• Buyout
• Fundraising
• People
• Kok Yew Tang
• Affinity Equity Partners