Five trends for 2015

• Larger private rounds in the tech space

Chinese mobile phone maker Xiaomi is said to be in talks over an investment that would value the company at $50 billion. Five years ago, this business did not exit. Two years ago, it was completing a $216 million Series D round at a valuation of $10 billion. Baring some dramatic reassessment of opportunities in the China, India and increasingly Southeast Asia technology space, companies will continue to raise larger rounds at higher valuations. VCs may start to resist the rising expectations of entrepreneurs looking for a Series A round, but for the likes of Xiaomi and Indian e-commerce player Flipkart, investors a) tend to be public markets investors looking for private markets alpha, not traditional VCs, and b) might argue that these companies are clear market leaders with defensible positions and the eventual IPOs will deliver even loftier valuations. Time will tell.

• It will be tough to better the 2014 trade sale total

Asia private equity exits have hit an all-time high of $57 billion in 2014. At $8.5 billion and $37.9 billion, the IPO and trade sale exit figures are the second-biggest and biggest on record. The obvious question is whether this performance can be replicated in 2015. And the answer, particularly in the case of trade sales, is almost certainly no. This does not mean distributions will dry up, just that 2014 will be difficult to top. Three of the four largest trade sales ever seen in Asia have come this year: Affinity Equity Partners and KKR exited Oriental Brewery for $5.8 billion, QIC got $5.4 billion for Queensland Motorways (with a further transaction taking the total proceeds to $6.2 billion), and Permira sold Arysta LifeScience for $3.5 billion. There have only been eight disclosed transactions in excess of $3 billion.

• The IPO total will not be topped, but watch out for volatility

The $25 billion contribution that Alibaba Group made to the $55.2 billion in proceeds generated by Asia private equity-backed IPOs this year is clearly not going to be repeated. That in itself is no cause for concern. However, the volatility creeping into the US and Australian markets, which have been so active over the past 12 months, is a worry. In both markets, some offerings have been pulled in recent weeks while others have underperformed. The tap isn't being turned off - even in Australia, which has been known to turn quite abruptly, there appears to be sufficient momentum that one large, poorly received offering would not have devastating effects. But investors may become more selective. In China too, although for different reasons, conditions remain uncertain.

• Judgment day for Indian private equity

Sentiment appears to be turning on Indian private equity, with country-focused managers having raised nearly $2.4 billion so far this year, up from $1.9 billion in 2013. AVCJ can think of at least eight managers, who are either in the market or about to enter it, looking for combined commitments in the region of $3 billion. A clutch of funds will be raised quickly, others will take a long time and the rest will struggle along somewhere in the middle. With public markets rebounding in anticipation of Prime Minister Nahendra Modi rolling out promised and much-needed economic reforms, the GPs have picked their timing well. Or have they? As we have seen with Japan, the possibility of policy innovation excites markets, but they soon lose steam in the absence of concrete action.

• A big year for Australian infrastructure

There has been a degree of activity in 2014 on the Australian infrastructure front, with QIC selling Queensland Motorways, Hastings Fund Management acquiring Port of Newcastle and Macquarie buying ANZ Terminals. Next year, however, could be much bigger. It estimated that A$50-100 billion ($41-82 billion) of infrastructure assets will be privatized over the next 2-3 years, with New South Wales' electricity distribution and transmission businesses thought be worth about A$30 billion, while the equivalent assets in Queensland are even larger. Local superannuation funds have demonstrated an appetite for these deals and the managers they work with - Hastings, IFM Investors, et al - could end up quite busy. With so much demand, these transactions do not come cheap.

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• Topics
• Fundraising
• Exits
• Technology
• Infrastructure
• Infrastructure
• Australia
• India
• Fundraising
• TMT
• Exit
• IPO
• Trade sale