Since 2009’s inception, investors have increasingly expressed interest in private equity funds focused on Asian countries. In the early part of 2009, investors were simply researching Asia-focused funds for future consideration. However, as the year has progressed, more and more investors have determined when and how much they will allocate to these funds.
One such firm, a private bank in Belgium, voiced its interest in Asia-focused private equity funds in early January. At the time, it stressed that it was only researching funds focused on this part of the globe and had yet to make any commitments. When a BHA analyst spoke with this same private bank in October, it was seriously targeting Asia-focused funds. Instead of its initial broad-based strategy search, the bank had narrowed its focus to midsize- and large-market buyout funds, and was planning to make allocations before the end of the first quarter of 2010.
The increased interest in Asia-focused private equity opportunities has been helped by the turnaround in the global economy. As 2009 progressed and the credit markets began to thaw, investor sentiment took a turn for the better. As investors gained confidence and the markets rebounded, the number of IPOs rose. On the stock exchanges of Hong Kong and Shenzhen alone, there have been 76 IPOs.1 This has caused private equity activity to increase as managers source deals and exploit opportunities within the marketplace.
As 2009 comes to an end and investors prepare themselves for 2010, Asia is likely to continue to be an investor target. According to IMF estimates, emerging Asia, which excludes developed economies such as Japan and Australia, is expected to grow by 7 percent in 2010.2 With many factors pushing Asia’s economic expansion forward, it can be expected that private equity investors will continue to dedicate both time and money to finding opportunities in this region next year.
1Asia Private Equity Review – Greater China Edition, “The Dragon Dance,” November 2009.
2 The Wall Street Journal, “IMF Raises Its Forecast for Growth Across Asia,” October 30, 2009.
