Asian fundraising set for record-breaking year

Asia’s private equity report card for the first half of this year is out: fundraising has surpassed last year’s record levels but transaction value has fallen compared to the first six months of 2006.

Asian private equity has continued to attract fresh funds and 2007 could well set a new record for amount of funds raised. In the first half of 2007, $15.4 billion of fresh capital was raised, 57 percent up over the same period in 2006, according to Asia Private Equity Review, a Hong Kong-based data provider.

Affinity Equity Partners, Navis Capital Partners, China’s CDH Capital, Tokyo-based Advantage Partners and Sydney-based Archer Capital were among the largest fundraisers during the first half of the year. 

In the next six months, KKR Asia, CCMP Capital Asia, TPG Capital, CVC Asia Pacific and Pacific Equity Partners are expected to complete raising the region’s megafunds.

Venture capital funds surged 82 percent from the same period a year ago to $2.82 billion. China alone drew $2.2 billion, accounting for the lion share of the venture funds raised for the region.

The first half of the year saw the arrival of VC Kleiner Perkins Caufield & Byers with a $360 million country-focused fund, after subsuming TDF Capital, an independent China-focused team and hiring staff from SAIF Partners. Sequoia, meanwhile, has raised two separate pools of money for China totalling $750 million, of which $250 million is dedicated to venture deals.
While funds raised and divestments have risen from the first six months of 2006, deal value aggregate has declined by nearly 20 percent during this period.

Investments amounted to $18.1 billion in the first half of 2007, compared to $22.65 billion for the first half of 2006. India, for the first time, led in transaction and deal aggregates. From January to June, India attracted $3.87 billion of commitment from private equity investors, through 111 deals.

At the start of the year, Australia had looked promising, and poised to produce a number of record transactions, but the two highest profile buyouts of Coles and Qantas have since collapsed.

The region will likely continue to suffer a short-term slowdown as US subprime woes cause credit to tighten for large-scale transactions. Funds that do not rely too heavily on leveraging and financial engineering will probably be less affected, sources say.

In terms of divestments, 144 sales were initiated in the first half of 2007, a 62 percent increase compared with the first half of 2006.

In the first half of 2007, APER data showed a total $7.84 billion returned to investors for invested capital that amounted to $3.47 billion.