Asia-Pacific private equity funds still ‘one step behind’ US, European counterparts, new report says
- One factor holding back funds in Asia-Pacific may be the region’s more demanding exit environment, according to eFront report
- Private-equity deals in Asia-Pacific in 2020 at slowest pace since 2012, according to Refinitiv
Private equity funds in China and other emerging economies in the Asia-Pacific region need to consistently deliver substantial net cash distributions to investors to catch up with rivals in North America and Europe, according to a new report by financial services software provider eFront.
In its research, eFront, which is owned by BlackRock, the world’s biggest asset manager, found that private equity funds in China, India, Indonesia and Singapore have matured much more slowly than funds in developed markets. In part, calls for more cash from investors by emerging Asia funds have largely outweighed distributions, leaving them “one step behind” Western counterparts.
But, investors are increasingly looking for places to effectively deploy capital as they seek to avoid negative interest rates in Europe and opportunities to avoid a prolonged exposure to cash, creating an opportunity for the region’s US$1.1 trillion industry, eFront said.
China and other emerging economies in the region are less penetrated by buyout funds than more developed markets, so there is "much more room for growth, according to Tarek Chouman, the eFront chief executive.
“Wealthy families own the most substantial portion of mid-market business in southeast Asia, and we are expecting to see their growth supported by [private equity] funds,” Chouman said, meaning there may be more targets available as the business landscape matures in the region and greater opportunity for the region’s funds to catch their rivals.