This online issue of the Asia Private Equity Review is made available with abbreviated content. To read the full content together with more in-depth news, perspectives, and analysis, please subscribe or contact us to purchase back issues.
May 2008 Issue
In BriefRecord Achievements in Asian PE further testifies to the industry’s strength in managing issues arising from the prevailing unfavourable market environment Feature
Fund Sizes Swell and Closed at breakneck pace with an average 3-fold increase and less than 36 months interval for current and preceding funds Analysis
Taiwan’s New Political Regime will further accelerate economic integration already taking place in both markets Focus
Asian Institutional Investors are investing abroad as they broaden their scope outside of the region Institutional Investors
Institutional Capital Finds Warm reception in developing economies only Institutional Investors
Buyouts Grip SE Asia Market with a Vietnam-based firm joining the game Buyouts
China Promotes Clean Air via private equity funds Greater China - Funds
Deal Pace in China Shows No abatement, particularly in non-control situations Greater China – Investments
Investors Pare Down Holdings in Belle and record one of the best performances in China Greater China – Divestments
Billion Dollar Fund is the Norm in Indian private equity, with an estimated US$16.5 billion expected to come in via 12 billion-funds that are being raised India Corner – Funds
India’s Venture Investors Go Abroad for deals India Corner– Investments
Content
Analysis
Focus
Institutional Corner
News
Institutional Corner
Funds
Investments
Pan Asia
News
Funds
Greater China
News
Funds
China Goes Green
Buyouts
Investments
Divestments
India Corner
News
Funds
The Billion Dollar Fund Party
Investments
Subscriber Weekly Summary
People on the Move
Summary
Index & Exchange Rates
Crisis Management
A mid the credit drought, global mergers and acquisitions (‘M&As’) pace has been the slowest for the past three years. According to Dealogic, it took 107 days before this year’s M&A volume reached US$1.0 trillion. This compared to 85 days in 2007 and 93 days in 2006. On a year-on-year basis, global M&As declined by a significant 27% as of 17th April. Yet the deal landscape in Asian private equity presents a sharply different picture. In the first four months of the year, Asia Private Equity Review recorded a transaction aggregate that amounted to US$21.9 billion, with 264 deals known to have been completed. It is by far the most active year, compared to the US$13.4 billion and US$14.2 billion recorded for the same period in 2007 and 2006 respectively. The increment, in both capital deployment and number of deals, is an encouraging display of the strength of Asian private equity markets during this most tumultuous period in recent history for the global financial industry. In each of the Asian major economies, shining investment stories continue to emerge, even though the macro economic environment has been marred by a liquidity crunch, soaring oil prices, inflation and stock market volatility.
The Commanding Players
With both China and India having established their central position as the markets that now hold the key to the future course of Asian private equity in Asia, their responses to the prevailing onslaught mirror the strengths and the weaknesses of private equity in Asia.The Artery of Capital
To these two emerging economic juggernauts in Asia, their respective stock markets are the ultimate governor of investors’ portfolio performance. The adjustments that took place during the past four months have been somber. In 2007, China’s nascent A-share market was lauded as one of the top performers. However, during the first quarter of this year, the Shanghai Stock Exchange’s Composite Index recorded its worst performance in the 15 years since 1992. Even Hong Kong’s Hang Seng Index , which recorded one of its worst declines during mid March, recorded a decline of 8% for ...This online issue of the Asia Private Equity Review is made available with abbreviated content. To read the full content together with more in-depth news, perspectives, and analysis, please subscribe or contact us to purchase back issues.
Greater China Corner - FundsChina Goes Green
The drive for clean air is gathering momentum in China
According to the Netherlands Environmental Assessment Agency, China had overtaken the USA as the world’s largest emitter of carbon in 2006. During those twelve months, China produced 6,200m tonnes of carbon dioxide, compared with 5,800m tonnes from the US, while Britain produced about 600m tonnes. The government of the world’s most populous nation also recognises the pressing need for clean air, as industrial growth of the country continues to accelerate. In April this year, the State Council moved to launch the largest environment fund in China, and has set the country’s clean air drive in motion.
The organisation that has been mandated to take charge of such a task is GT Consulting Ltd. which is a subsidiary of China General Technology (Group) Holding Ltd.. The latter is affiliated with the State-owned Assets Supervision and Administration Commission of the State Council.
GT Consulting Ltd. is to establish a 50 billion yuan (US$7.14 billion) China Environmental Investment Fund, an industrial fund that targets opportunities in the environmental sector of China. The fund will deploy 75% of the total capital in long-term projects, with the remaining amount to be allocated for pre-initial public offering situations. According to local reports two domestic organisations, Z.K.C. Environmental Group Co., Ltd. and the China Environmental Service Industry Association, are considering to become investors in this latest industrial fund in China
The Asian Development Bank (‘ADB’) is also playing a role in fuelling this clean air drive in China. It recently announced the deployment of US$100 million as seed capital that will fund five clean energy funds in Asia. Of these five funds, two of them are focused on China, being China Environment Fund III and China Clean Energy Capital Fund.
Foreign investors are also seizing this new set of opportunities arising from Beijing’s earnest attempt to reduce the carbon footprint of the country. The UK-based Climate Change Capital has already set up an office in Beijing. According to Mr Yuebing Lu, managing director, Climate Change Capital has a capital pool of €870 million (US$1.36 billion) and is ready to deploy the capital in China.
The Beijing-based Tsing Capital was a pioneer in pursuing a clean technology fund as early as 2002. Currently, it is raising its third and latest fund that has a target of US$200 million to US$250 million.
In late April, China announced joining hands with the US Chicago Climate Exchange to establish a carbon emissions market in the city of Tianjin. The exchange will trade permits for emissions of greenhouse gas like carbon dioxide and sulphur dioxide.
India Corner - FundsThe Billion Dollar Fund Party
Billion dollar funds have become the norm in IndiaWhen 3i Group plc announced the final closing of its first infrastructure fund in mid April, it set a milestone for the private equity industry in India. This is the second billion dollar fund since ChrysCapital, a domestic independent fund management firm, achieved final closing for its ChrysCapital V in July 2007 with a fund pool of US$1.25 billion. 3i India Infrastructure Fund is the first billion dollar infrastructure fund established by a non-Indian institution. India has now firmly joined four other major markets in the region, Australia, China, Japan and South Korea in attaining the elite status of being home to billion dollar country funds.
It is less than a year since 3i India Infrastructure Fund was launched, but the fund had an auspicious start when it secured US$500 million in commitments from the parent organisation, 3i and its affiliated 3i Infrastructure Ltd. The remaining capital has come from 16 institutional investors from Europe, North America, Asia and the Middle East. As an indication of investors’ overwhelming interest to access India’s infrastructure assets, the final closing that 3i Infrastructure Fund managed to achieve, at US$1.2 billion, has exceeded the original target of US$1.0 billion by 20%.
3i India Infrastructure Fund will primarily focus on power, ports, airports and road projects in early-stage and mature infrastructure operations.
India’s budding private equity industry is set to witness a glowing record of more billion dollar funds. On the heels of 3i’s announcement of its first infrastructure fund for India, the State Bank of India (‘SBI’) and Macquarie Capital Group Ltd. (‘Macquarie Capital’) have also unveiled their ambition to launch a US$2 billion India infrastructure fund. The notion of launching such an infrastructure fund was first hatched in September last year. At that time, it was understood that the target fund size was US$1 billion. During the past six months, SBI and Macquarie Capital have decided to instead double the target size of their joint venture fund.
There are at least a total of 12 billion dollar funds known to have been launched targeting opportunities in India. While infrastructure funds dominate by accounting for 75% of the billion dollar funds being planned, others see emerging opportunities in an array of opportunities in other industrial sectors. Mr Azim Premji, chairman of Wipro Ltd., one of India’s largest information technology (‘IT’) services company is reportedly planning a multi-billion dollar fund to seek opportunities in the IT sector. Earlier, there have been reports that indicated Ripplewood Holdings could be launching the first buyout fund sponsored by a foreign private equity house with a target size of US$1 billion. When these 12 organisations have successfully raised their respective funds for India and, assuming their target sizes are met, they will bring in an additional staggering US$16.5 billion to the Indian private equity industry.