Regional update: A time to invest?

Instead, I want to share some feedback on the various markets that I have heard in my conversations this year. I am glad to say that most of them look pretty positive although the actual investment numbers are well below last year's comparable figures.

China - A softer economy has meant a slower market for private equity-backed exits but GPs are keeping themselves busy with more creative deal making, in many cases by partnering up with disaffected chairmen of US-listed companies and making take-private bids. The more prominent US dollar-denominated funds, such as FountainVest Partners and CDH Investments are still highly sought after by investors and are managing to raise significant amounts of capital. Their renminbi-only counterparts, meanwhile, have slowed down substantially.

India - As I wrote last week, the Indian market is now seeing signs of revival with a good number of deals. However, the latest concern is that funds - which are based offshore and US dollar-denominated - are being hit by a free-falling rupee and losing 30-40% of the value of their already difficult-to-exit portfolio companies. On the flip side, it's a great time to invest.

Southeast Asia - This has been one of the more attractive markets for LPs, who generally have less exposure to the ASEAN countries. Mid-size funds focused on this region - Southern Capital and KV Asia spring to mind - are proving popular and appear to be raising capital. However, Southeast Asia is still a relatively difficult market for investment. Indonesia, for example, has seen nowhere near enough international PE deals that might justify all the hype.

North Asia - Both LPs and GPs are quite optimistic about Japan and South Korea. Spurred by the arrows of Abenomics, the Japanese market seems to be buzzing although deal activity remains slow. However, in our recent AVCJ Japan Forum, local players believe that it is only a matter of time before the market lives us to its promise. The same goes for South Korea, which saw a big jump last year - much of it driven by a few very large transactions - but has been relatively quiet so far this year.

There are also a number of countries that don't warrant a place on my roadmap yet are making positive changes. Amongst them is Taiwan, which after a brief period of strong buyout activity in 2006-2008, has basically been dormant.

In recent weeks, lawmakers have softened their stance and are now deliberating new regulations that are favorable to the industry. We hope to engage with them, and the GP community, more in the coming months as these efforts - hopefully - bear fruit.

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• Topics
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