global private equity fundraising overview

IN A NUTSHELL 6 by Faza Sakinah & Hazrul Izwan The number of private equity (PE) funds globally has declined by 49.8% from US$422 billion in 2008 to US$212 billion in 2009 due to reduction in the number of capital raised. The market seems unpredictable and upheaval from 2009 to 2011 which is caused by economic slowdown, overheated economy in China, sovereign debts crisis in Europe and debt ceiling debate in US are the key factors which continuously making global fundraising activities more challenging. North America remains the largest region for capital raising by securing 36.2% of total capital raised, followed by Asia-Pacific region (14.7%) and Western Europe (12.2%) (Fig.1). According to “Asia Pacific Private Equity Review” survey results released in March 2012 by Private Equity International, growth/expansion capital, venture capital and buyout funds represent the top three strategies adopted by general partners (GPs) targeting Asia in 2011. Out of these three strategies, growth/expansion capital funds outperformed across all type of fundraising strategies with an aggregate amount of US$12 billion. The increasing in PE investments in Asia (particularly Southeast Asia and China) has been caused by issues in the US and Europe such as the regulatory pressures and financial instability which give advantages towards the Asian countries. The top two countries that are GP favorites are China and India with 57% of capital raised and 12% respectively. As for India, it was from US$2 billion to US$3 billion from 2009 to 2011. Although China is dominating the private equity market with an aggregate fund of US$16 billion, other Asian countries that are also growing are Indonesia, Japan, Malaysia, Mongolia and South Korea. Malaysia is way behind as compared to China and India. However, the past increase in investment is making Malaysia a hotspot to invest in given the attractiveness of its location within Asia’s geographical market. Malaysia was selected in a group of seven out of eight countries highlighted by respondents for the new area of opportunities in the SEA region together with Vietnam, Laos, Philippines, Cambodia, Thailand and Singapore (Figure 4). The survey report also highlighted that a sector which is favored by PE firms in the SEA countries include the consumer and retail sector, energy sector, and commodities sector to name a few. Also with the young population and the growing middle class and higher consumer spending, this makes Malaysia along with other SEA countries more appealing and attractive. This is an opportunity to attract more private equity firms to invest in Malaysia. Figure 4: Limited Partners’ (LP) current and future country-specific strategies Figure 5: Regional Breakdown of 2011 global capital raised GLOBAL FUNDRAISING OVERVIEW IPE Surveys shows that Malaysia was selected as one of new area of opportunities for investors globally along with other SEA countries such as Vietnam, Laos and Philippines PRIVATE EQUITY China is dominating the private equity market with an aggregate fund of US$16 billion, other Asian countries that are also growing are Indonesia, Japan, Malaysia, Mongolia and South Korea Australia Cambodia China Hong Kong India Indonesia Japan Laos Malaysia Philippines Singapore S. Korea Taiwan Thailand Vietnam I have not 30 25 20 15 10 5 0 Source: IPE Surveys Legend: Current investment/s Future investment/s % invested in APAC North America 36.2% Western Europe 12.2% Source: IPE Research Centre Funds targeting multiple regions 29.9% Latin America 5.3% Asia Pacific 14.7% Middle East/ Africa 1.1% Central & Eastern Europe 0.6% US$186 billion “

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Malaysia Property Incorporated Monthly Publication

TRANSCRIPT

Page 1: Global Private Equity Fundraising Overview

IN A NUTSHELL 6

by Faza Sakinah & Hazrul Izwan

The number of private equity (PE) funds globally has declined by 49.8% from US$422 billion in 2008 to US$212 billion in 2009 due to reduction in the number of capital raised. The market seems unpredictable and upheaval from 2009 to 2011 which is caused by economic slowdown, overheated economy in China, sovereign debts crisis in Europe and debt ceiling debate in US are the key factors which continuously making global fundraising activities more challenging.

North America remains the largest region for capital raising by securing 36.2% of total capital raised, followed by Asia-Pacific region (14.7%) and Western Europe (12.2%) (Fig.1). According to “Asia Pacific Private Equity Review” survey results released in March 2012 by Private Equity International, growth/expansion capital, venture capital and buyout funds represent the top three strategies

adopted by general partners (GPs) targeting Asia in 2011. Out of these three strategies, growth/expansion capital funds outperformed across all type of fundraising strategies with an aggregate amount of US$12 billion.

The increasing in PE investments in Asia (particularly Southeast Asia and China) has been caused by issues in the US and Europe such as the regulatory pressures and financial instability which give advantages towards the Asian countries.

The top two countries that are GP favorites are China and India with 57% of capital raised and 12% respectively. As for India, it was from US$2 billion to US$3 billion from 2009 to 2011. Although China is dominating the private equity market with an aggregate fund of US$16 billion, other Asian countries that are also growing are Indonesia, Japan, Malaysia, Mongolia and South Korea.

Malaysia is way behind as compared to China and India. However, the past increase in investment is making Malaysia a hotspot to invest in given the attractiveness of its location within Asia’s geographical market. Malaysia was selected in a group of seven out of eight countries highlighted by respondents for the new area of opportunities in the SEA region together with Vietnam, Laos, Philippines, Cambodia, Thailand and Singapore (Figure 4).

The survey report also highlighted that a sector which is favored by PE firms in the SEA countries include the consumer and retail sector, energy sector, and commodities sector to name a few. Also with the young population and the growing middle class and higher consumer spending, this makes Malaysia along with other SEA countries more appealing and attractive. This is an opportunity to attract more private equity firms to invest in Malaysia.

Figure 4: Limited Partners’ (LP) current and future country-specific strategies

Figure 5: Regional Breakdown of 2011 global capital raisedGLOBAL

FUNDRAISING

OVERVIEWIPE Surveys shows that Malaysia was selected as one of new area of opportunities for investors globally along with other SEA countries such as Vietnam, Laos and Philippines

PRIVATE EQUITY

China is dominating the private equity

market with an aggregate fund of

US$16 billion, other Asian countries that are also growing are

Indonesia, Japan, Malaysia, Mongolia

and South Korea

Aust

ralia

Cam

bodi

Chin

Hon