StepStone, the sixth-biggest secondaries fundraiser according to the SI 50, has opened an office in Singapore and is seeing more Asia funds coming to market.
In the wider fundraising market across primaries and directs, China’s slowdown has contributed to a major decline in regional fundraising totals. Funds targeting the region collected just $30 billion in the first three quarters of 2023, compared with $85.2 billion across 2022 and $126.6 billion the prior year, according to data from affiliate title Private Equity International.
Amid this, some LPs have gone so far as to attempt to offload LP interests in Chinese private equity funds, Adam Johnston, a secondaries-focused partner in New York, told PEI.
“We have seen more Asia funds come to the market. I would say the unfortunate thing for sellers is that it’s not yet met the pricing expectations that they are looking to divest,” Johnston said. “And so the actual volume that we’ve seen transact has been fairly modest relative to what we think that the desired supply would be, but that is evolving kind of quarter by quarter. I think the desire is more so among Chinese funds specifically, and then to a lesser extent outside of that.”
The reduction in capital available for China and the region more broadly may present opportunities for those LPs with the conviction to lean into Asia-Pacific.
“When we look at some of our non-US clients, they may have an even less US-centric view of the world, and so they may be looking at this as an opportunity… Other LPs are pulling back to either get access to managers that would have been difficult to access, or access specific transactions,” added chief executive Scott Hart.
These appetites may vary depending on the type and location of each institution.
“I would say that in the past, to be fair, Asia allocation has never been a significant part of the allocation plan,” said Vincent Hsu, a Beijing-based partner at the firm. “For our clients… some have been as little as almost zero, and then I think the highest would be maybe like 15 or 20 percent. And that’s probably geographic bias, given that these tend to be the Australian clients, given their exposure there.”
The US-headquartered firm this week launched its sixth office in Asia-Pacific, a spokesperson told PEI. Private equity partner Andy Tsai will lead the Singapore outpost, which is StepStone’s 27th globally. It will initially be staffed by four executives, two of whom are secondaries-focused and another who is real estate-focused.
StepStone, which provides investment and advisory services to global LPs, was responsible for approximately $659 billion of total capital as of 30 September, of which $81 billion sits in Asia-Pacific, the spokesperson said. It has 12 partners in the region and 37 investment professionals across Perth, Sydney, Seoul, Tokyo, Beijing and Singapore.
The firm’s expansion into Singapore comes as some international investors rethink their allocations to the region. China, in particular, has seen a significant decline in private equity fund closes and dealmaking as a result of regulatory and geopolitical uncertainties.
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