Summer daze

As August begins, deals are still being closed; some of them, like Silver Lake’s control investment in China’s Allyes, bringing not only major new players to the region, but also bringing new sectoral and control possibilities. Furthermore, AVCJ sources say that the tempo shows no signs of slackening off, with several large situations still in play, and every sign that 3Q10 will be even busier and more lucrative than the previous quarter.

The same astute readers may think back to our 1H10 data report, where fundraising and exits were both very attractive, but actual investment volume was only slightly up on the empty quarters of 2009. Without any actual statistical evidence, the first few weeks of the third quarter already feel more promising – confirmed anecdotally by sources. Of course, the large funds still seeking investments will certainly help lubricate the wheels, not least for the numerous secondary buyouts already closed and excepted imminently. LPs may not welcome them, but they look set to swell the numbers for the rest of the year.

But, even more encouragingly, sources see favorable macro conditions and vendor expectations across much of the region, but especially in China, where valuations seem to have moderated, and sellers and officialdom alike are ready to cut deals. Japan also, unexpectedly, is starting to offer some prospects, as asset holders finally grasp the nettle and sell, while local competitors for deals have practically died out. And in India and elsewhere, the region’s growth drivers remain intact and promise healthy underpinnings for investee performance.

So all those awkward questions about whether the asset class really does outperform the public markets, and whether GPs will face crushing taxation in the US and regulatory emasculation in the EU, can safely be left on one side for a few weeks. It’s the first long hot summer after a long dark night of the economic soul. Enjoy it, all.

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• Topics
• Performance
• Deals