Asia's private equity investors face another tough year but the market is expected to improve starting in the second half, according to industry practitioners.
'I don't think we will see a lot of change in the first six months,' said Jamie Paton, North Asia director of London-listed venture capitalist 3i and an executive committee member of the Hong Kong Venture Capital Industry Association (HKVCA).
The venture capital (VC) industry has been struggling with the aftermath of a glut of overinvestment during the technology bubble which burst in 2000.
Private-equity investment in the Asia-Pacific is estimated to have dipped 30-40 per cent last year, following a 3 per cent decrease to US$11.9 billion in 2001.
Private equity is a high-risk asset class that groups VC investments in young companies, development capital for mid-cycle companies, and financing of leveraged buyouts of mature firms.
Institutional investors such as pension funds typically allocate 2-5 per cent of their portfolios to private equity, but this ballooned to 10-15 per cent in some cases during the Internet boom, according to venture capitalists.
