Asia fundraising: Big beasts

Starting with Bain Capital Asia II, which reached a final close in July 2012, roughly one year after launch, eight firms have raised $27.2 billion between them. In addition to Bain and Carlyle, they include KKR, MBK Partners, Affinity Equity Partners, CVC Capital Partners, TPG Capital and Morgan Stanley Private Equity Asia. (PAG and RRJ Capital complete the top 10 but the former has so far only raised one fund while the latter raised its debut vehicle after the crisis. Meanwhile, Carlyle's third Asia fund and MBK's second straddle the period, but both launched several months before Lehman Brothers collapsed.)

In all but two cases the funds are larger than their predecessors. Four finished above target with two increasing their hard caps. Aggregate capital raised by the eight in this vintage is $5.3 billion larger than the last. Overall private equity fundraising by Asia-focused managers - taking into account incremental and final closes - came to $173.8 billion between 2006 and 2008; it stands at $142.6 billion for 2011-2013, and close to half of that went into renminbi-denominated funds.

There are two conclusions we can draw from this, both already well known. First, in recent years we have seen a flight to quality in Asian private equity as LPs gravitate towards a smaller number of GPs, with stand-out performers and brand names the obvious beneficiaries. Second, when individual markets are blighted by uncertainty or instability, there is comfort in a pan-regional strategy - although the leading GPs in the likes of China and India will continue to raise money.

It remains to be seen whether some of the current generation of pan-Asian funds are "too big," particularly given that LPs are seeking larger co-investment allocations alongside the funds.

As to what will occupy the fundraising landscape now the big beasts have vacated it, the answer is a mixed bag. Baring Private Equity Asia, which is understood to have increased the hard cap on its sixth pan-regional fund, looks set to cement its position in big beast territory later this year.

Beyond that, we have already witnessed a blossoming in venture capital raising - mainly for China - this year. And more is expected of the mid-market. Strip out funds with an element of government or strategic interest and there were three final closes of $2 billion or more in 2013, nothing else of $1 billion-plus and just four representatives in the $500 million to $1 billion bracket. The previous year five funds raised $1-2 billion and nine finished on $500 million to $1 billion.

As we have said many times before, it is still relatively early days for Asian private equity. Regardless of size, reputations will be made and lost, and LPs will scrutinize managers even more closely for evidence that they are worth their compensation.

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• Topics
• Fundraising
• Fundraising
• Asia
• The Carlyle Group
• Affinity Equity Partners
• CVC Capital Partners
• TPG Capital