PE a key focus for institutions investing in Asia – survey

A poll conducted by RBC Investor Services found that a third of respondents were intending to prioritize private equity in their portfolios.

"Both mutual funds and alternative investment products, such as hedge and private equity funds, are attracting sustained interest across the Asia-Pacific region," said RBC.

Respondents were allowed to select up to three types of funds where they would concentrate their investment. Mutual funds proved the most popular choice, commanding a place on the list of 41% of survey participants, while more than a third of institutions said they would invest in hedge funds in Asia Pacific between now and the end of 2013.

The survey also considered the main challenges facing the region's fund industry. The global financial crisis was the most commonly cited challenge (85%), followed by fragmentation of the market and regulatory obstacles.

One regulatory hurdle that appears to have concerned LPs more than GPs in Asia of late is the Foreign Account Tax Compliance Act. In February, the US Internal Revenue Service (IRS) issued a draft of the regulations, which require foreign financial institutions (FFIs) - including most private equity firms - to declare all US investors in their funds to the IRS. Should they fail to do so, they will be labeled a "recalcitrant account holder" and the IRS will withhold 30% of any payment travelling to the fund outside the US, i.e. almost a third of the portfolio company dividends payable to LPs.

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• Topics
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• LPs