APAC asset owners optimistic on regional private equity
The majority of asset owners in Asia Pacific (APAC) are positive on the outlook for private equity in their own region in 2023 and 2024, while asset owners in North America and Europe are more skeptical about investing into APAC private companies.
Approximately 70% of those surveyed believe the upcoming years can create value for them as limited partners (LPs) in private equity fund vehicles, according to the latest Global Private Equity Barometer from private equity secondary market investment firm Coller Capital.
“Asia Pacific is a broad and diverse region, with a mix of opportunities across different geographies and strategies. LPs in Asia are more positive as they are closer to the key markets and opportunities, and as such have a clearer view on how to best access them,” William Yea, principal at Coller Capital, told AsianInvestor.
APAC investors believe healthcare, renewables, and business services sectors are poised to benefit from this strong investment appetite in APAC in the next two years.
This largely aligns with their surveyed global peers, as healthcare is seen as the most attractive sector for private equity investment, followed by IT and business services.
TRAVEL UPTICK
Looking at the total global sentiment among surveyed investors, only 45% believe that 2024 will be a stronger vintage year for Asian private equity. This indicates that investors in North America and Europe are noticeably less optimistic about the outlook for private equity in APAC.
“The reduced travel in recent years may be the source of some of this trend, although we can see from the barometer responses that 80% of LPs expect travel levels for fund commitment due diligence to return to pre-COVID levels over the next year,” Yea said.
He pointed out that growth capital is a significant proportion of the APAC market, and at this point investors are taking a less bullish stance on this strategy relative to other strategies.
“That said, growth investments continue to offer long term opportunities in Asia, if priced appropriately,” Yea said.
STRONG DEMAND
APAC investors remain confident in the outlook for private markets, with a majority planning to increase or maintain their allocation in the next 12 months, the survey also showed.
Over 90% of the APAC investors expect to either increase or maintain their target allocation in alternative assets in the next 12 months. Infrastructure, private equity, real estate, and private debt/credit are the top four private assets favoured by APAC investors.
The survey was undertaken for Coller Capital from February 13 to March 31, 2023 by Arbor Square Associates, a specialist alternative assets research team with over 50 years of collective experience in PE.
The survey researched the plans and opinions of 110 investors in private equity funds. The investors are based in North America, Europe, and the Asia-Pacific region including the Middle East.