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  • PREQIN SPECIAL REPORT: ASIAN PRIVATE EQUITY & VENTURE CAPITAL

    SEPTEMBER 2017

    alternative assets. intelligent data.

  • © Preqin Ltd. 2017 / www.preqin.com2

    PREQIN SPECIAL REPORT: ASIAN PRIVATE EQUITY & VENTURE CAPITAL

    CONTENTS

    All rights reserved. The entire contents of Preqin Special Report: Asian Private Equity & Venture Capital, September 2017 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Special Report: Asian Private Equity & Venture Capital, September 2017 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Special Report: Asian Private Equity & Venture Capital, September 2017. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Special Report: Asian Private Equity & Venture Capital, September 2017 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Special Report: Asian Private Equity & Venture Capital, September 2017 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

    p3 CEO’s Foreword p4 Key Stats

    p5 Optimism and Opportunities Seen in Asia-Pacific - Alexandre Schmitz, Capstone Partners p7 Asian Private Equity & Venture Capital Universe p10 Assets under Management p12 Performance p13 Fund Manager and Investor Outlook p15 Buyout p16 Growth p17 Fund of Funds p18 Venture Capital p19 Greater China p20 Northeast Asia p21 ASEAN p22 South Asia

    PRIVATE EQUITY ONLINE

    Private Equity Online is Preqin’s flagship online private equity information resource and encompasses all of Preqin’s private equity and venture capital databases, with unrivalled data and intelligence on all aspects of the asset class, including fund terms and conditions, fundraising, fund managers, institutional investors, fund performance, deals and exits and more.

    Constantly updated by our teams of dedicated researchers strategically located in industry centres around the globe, Private Equity Online represents the most comprehensive source of industry intelligence available today.

    www.preqin.com/privateequity

  • alternative assets. intelligent data.

    3

    DOWNLOAD DATA PACK: www.preqin.com/PEASIA17

    Where does Asian private equity & venture capital sit within the global industry, and what are its prospects? Looked at on most metrics, Asia accounts for approximately 15% of the global private equity & venture capital industry. Aggregate capital raised for Asia-Pacific-focused private capital funds over the period 2007-2016 accounted for 14% of the global total, although its share has fluctuated over this period (see page 5). Asia rebounded more quickly than North America and Europe after the Global Financial Crisis, reaching 23% of global capital raised in 2011, but more recently North America and Europe have regained their pre- 2008 levels, while Asia has decreased from its 2014 peak in absolute terms.

    Dig beneath the surface, and there are some major evolving trends. The returns that investors have earned on Asia-focused private equity & venture capital funds have been very similar to those from North America- and Europe-focused funds – neither significantly better, nor significantly worse (see page 12). Until now, the big difference has been cash flows: starting in 2011 in North America and in 2013 in Europe, investors began to see significant positive net cash flows from their private equity & venture capital investments. The criticism levelled at Asia-focused funds has always been: “Yes, the IRRs are OK, but when do we get our money back?” Starting in 2016, that question now appears to be answered: Asia-focused funds are now delivering strong positive net cash flows back to their LPs. If this continues, then the implications for the industry in Asia will be profound: the one significant factor holding some LPs back from committing to Asia-focused funds will have been removed, and significant growth and success are likely to lie ahead.

    The potential for growth in Asia can already be seen in the tremendous expansion in venture capital deal activity over the period 2013-2017 (see page 18). Greater China now rivals the US as a hub of venture capital activity and deal flow has never been stronger. Nor is the venture capital growth story limited to Greater China: Northeast Asia, ASEAN and South Asia are all seeing rapid growth and development in their venture capital industries (see pages 19-22).

    The bottom line is that the outlook for growth in Asian private equity & venture capital has rarely looked stronger: continued economic growth, favourable demographics, a burgeoning middle class and a maturing industry delivering positive net cash flows to its investors all point to major long-term growth.

    Preqin is therefore delighted to present our 2017 report on Asian Private Equity & Venture Capital; we hope you will find it to be a useful pointer to the growing opportunities for investors and fund managers alike. The report forms a small part of Preqin’s expanding commitment to the region: starting with our regional hub in Singapore in 2010, Hong Kong and Manila were added in 2016, and our new China research centre opens in Guangzhou in October 2017. Our growing research, sales and customer service teams are committed to enhancing the quality of data and level of service that we offer our customers in the region – and indeed to our global customers who also rely on the best data in Asia.

    We thank our customers for your support, and will continue to develop the service to meet your requirements.

    Happy investing,

    Mark O’Hare

    CEO’s FOREWORD - Mark O’Hare

  • © Preqin Ltd. 2017 / www.preqin.com4

    PREQIN SPECIAL REPORT: ASIAN PRIVATE EQUITY & VENTURE CAPITAL

    KEY STATS

    China

    India

    898

    232

    83

    328

    Japan

    217 206

    Hong Kong

    200

    87

    South Korea

    150 100

    Malaysia

    56 19

    Singapore

    193

    64

    KEY FACTS ASIA-BASED PRIVATE EQUITY & VENTURE

    CAPITAL FUNDRAISING IN 2017 YTD BY FUND MANAGER LOCATION (AS AT AUGUST 2017)

    LOCATION OF ASIA-BASED PRIVATE EQUITY & VENTURE CAPITAL FUND MANAGERS AND INSTITUTIONAL INVESTORS

    $562bn Amount of capital raised by Asia-focused private equity & venture capital vehicles since 2010.

    $484bn Size of the Asian private equity & venture capital industry as at December 2016.

    $521bn Aggregate value of buyout and venture capital deals completed in Asia since 2010.

    Greater China

    Northeast Asia

    ASEAN South Asia

    51

    11 9

    1616.2

    3.0 1.4 1.8

    No. of Funds Closed Aggregate Capital Raised ($bn)

    Fund Managers Investors

    Other

    72

    172

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    DOWNLOAD DATA PACK: www.preqin.com/PEASIA17

    OPTIMISM AND OPPORTUNITIES SEEN IN ASIA-PACIFIC

    - Alexandre Schmitz, Capstone Partners

    CURRENT STATE OF THE PRIVATE MARKET INDUSTRY IN ASIA-PACIFIC As illustrated by Fig. 1, funds focused on the Asia-Pacific region represent 14% of the $5.9tn raised over the last decade. Across this time period, the majority of the Asia-Pacific-focused funds are fairly evenly split between buyout, growth, venture capital and real estate strategies.

    Following the GFC, the amount of capital raised for closed-end funds focused on the Asia-Pacific region rebounded more quickly than for funds focused on the West. At the end of 2011, 23% of the money raised globally was dedicated to investment in the region and, as seen in Fig. 2, it was the second largest destination for deploying money, after North America and before Europe. Over the last two years, North America and Europe have recovered to their pre-2008 levels while the Asia-Pacific region has decreased from its 2014 peak in absolute terms. The most recent figures show that the amount raised during the last 12 months by funds focused on Asia-Pacific ($70bn at the end of June 2017) was 24% below the peak at the end of 2014 ($93bn), and is now less than 10% of the amount raised globally.

    The two main drivers of this negative trend are the decreasing amount of capital raised by Japan-based managers and the limited number of international managers raising money to be deployed in the Asia-Pacific region since the end of 2014. Over the last few months, more than 10 Japane

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