Secondaries funds with a specific Asia-Pacific focus remained thin on the ground in 2017.
There was just the one final close of an Asia-Pacific dedicated fund: TR Capital raising $200 million for its third fund which closed in the first half of the year, according to PEI data.
Deal volume in the region has hovered at around 6 percent of global volume since 2014, according to data from Greenhill Cogent, frustrating those who expected 2017 to be a breakthrough year for the region.
However, some of the most interesting deals of the year have taken place in Asia-Pacific or at least have an Asia-Pacific flavour.
In July Warburg Pincus worked with Lazard to help it sell a strip of Asian assets from its 2012-vintage Warburg Pincus Private Equity XI, reducing its own exposure to the region while allowing others to increase theirs.
EQT‘s stapled deal in September involved Partners Group buying stakes in the 2011-vintage EQT VI and and the 2015-vintage EQT VII funds, while committing to EQT Mid Market Asia III. With a hard-cap of $800 million, the fund is expected to hold its final close in the first quarter of next year.
In the same month Canada Pension Plan Investment Board emerged as the backer of a stapled deal on Olympus Capital Asia’s 2007-vintage fund. The transaction involved Canada’s largest pension providing as much as $200 million in preferred equity to Olympus Capital Asia III and committing $30 million to Olympus Capital Asia V, a 2015-vintage mid-market buyout equity fund seeking $750 million.
It was not all complex transactions either. In August Japanese co-operative Norinchukin Bank offloaded a portfolio of tail-end stakes to Strategic Partners, suggesting that even though Asian financial institutions may have fulfilled regulatory obligations that led disposals of private assets, selling stakes remains attractive.
In October securitisation came back on to the agenda with Secondaries Investor reporting that Singapore state-owned investment company Temasek Holdings was to return with a collateralised fund obligation. Unlike previous incarnations in which Temasek used private equity assets that it already held, Astrea IV may contain assets acquired especially for the vehicle, including buyout interests bought from British Columbia Investment Management Corporation.
There were signs, too, of firms bulking up their presence in the region. In June direct secondaries specialist NewQuest Capital Partners brought in Bain & Company’s Sachin Khandelwal as director and head of portfolio of its newly opened Mumbai office.
And in June Deutsche’s Asian secondaries head Jason Sambanju left to form a new venture called Foundation Private Equity, which according to its website partners “with investors in Asian private equity to recalibrate funds and portfolios utilising bespoke secondary solutions”.
Clearly, to Sambanju at least, prospects for Asian secondaries in 2018 are bright.