1. Asian fundraising is more complex than it seems
Published: 01 September 2013
By: Drew Wilson
KKR’s new $6bn Asia vehicle has redefined the boundaries of what’s possible for fundraising in the region,
though the bigger picture may not be quite as positive.
When Kohlberg Kravis Roberts closed its $6 billion pan-Asia fund in July – the largest private equity vehicle
ever raised for the region – it was generally perceived as a very encouraging sign for the market.
Institutional investor commitments to the fund indicated “a very strong global appetite for sizeable exposure
to Asia”, as Hamilton Lane managing director Juan Delgado-Moreira put it (a view was echoed by many
other sources). The sheer size of the fund also suggested that bigger deals may be in the offing, he added.
“What we thought that was a limit to deal value is no longer seen as such.” The record fund seemed to
affirm that macro concerns are not constraining appetite for Asia’s broadening and deepening market.
But the data suggests an apparently contradictory story. During the last three years, Asian funds targeting
$1 billion or more have been taking an increasingly longer time to raise, according to Private Equity
International's Research & Analytics division.
As of mid-August, the average big fund closed in 2013 had been on the market for 16.6 months. In 2011,
the equivalent figure was 8.4 months.
This year, the fastest large-scale fundraising has been that of RRJ Capital, which took 11 months. But last
year, there were four $1 billion-plus funds raised faster than this. And in 2011, there were six.
That’s in marked contrast to North America, where there have been at least five $1 billion-plus funds raised
in 11 months or fewer this year (and there were at least five last year, too).
Clearly the macroeconomic backdrop is significant here. The US economy is showing signs of life again just
as Asia seems to be slowing. And an end to US quantitative easing – which will lead to higher interest rates
– will put a further dent in Asia’s growth.