One-third of Asia-Pacific investors planned to increase their investments in private equity in the next two years, with the region continuing to harbour the most attractive opportunities within the asset class, according to a report by Coller Capital.
Almost one-third (33 per cent) of Australasia’s limited partners (LPs) were planning to increase their private equity investments over the next two years, Coller’s survey of 110 LPs said.
“The private equity investor community as a whole is planning to increase its exposure to Australasia and Korea,” said Coller.
“This is in contrast to Japan, where private equity exposure will stagnate or reduce.”
More than half (54 per cent) of LPs believed that private equity was now more correlated with public equities. Asia-Pacific LPs had made on average annual returns of between 11 per cent and 15 per cent a year during the lifetime of their investments in private equity, according to Coller.
Forty two per cent of Asia-Pacific LPs, one-third of North American LPs and a quarter of European LPs planned to sell their private equity investments in the next two years, said Coller. Regulatory changes that required LPs to invest in less risky assets were driving sales in North America and Europe.
North American and European LPs were more confident on China and India compared with their Asia-Pacific counterparts. Still, 38 per cent of LPs surveyed plan to increase their exposure to China and 31 per cent to India.
More than half of Asia-Pacific investors listed competition for deals in the region as the greatest challenge for investing in private equity in the next three years.The reputation of many private equity funds had been damaged because their investments after the global financial crises had failed.
“There are several GPs that raise one fund and never raise another,” said Coller Partner Jon Freeman.