Affinity plans fourth Asian fund, eyes new markets

Affinity Equity Partners, an Asia-focused private equity firm launched by former top UBS Capital bankers, plans to raise a new multi-billion-dollar buyout fund to tap more deals in the fast-growing region, according to sources familiar with the situation.

Affinity, co-founded in 2002 by K.Y. Tang, former chairman of UBS in the Asia Pacific region, aims to exceed the size of its most recent fund, says one of the sources. The Hong Kong-based firm raised $2.8 billion for Affinity Asia Pacific Fund III, which closed in 2007.

More than half of the capital from the third fund has been invested, says one of the sources.

Limited partners had been briefed on the plans, although formal fund-raising presentations won’t start until the second half of the year, say the sources. Affinity’s fourth fund will focus more on new markets in Southeast Asia, say the sources.

The sources declined to be identified as the fund-raising plan is private and confidential. Affinity was not immediately available for comment.

Affinity’s LPs include the California Public Employees’ Retirement System and many other U.S.-based and European pension funds.

Affinity was initially branded as a South Korea-focused investment firm due party to Tang and his team’s long-time deal making experience and good connections in Asia’s No. 4 economy. In South Korea, Affinity’s main rivals include MBK Partners, whose co-founders are former senior executives at The Carlyle Group in Asia.

In 2009, Affinity joined hands with U.S. buyout giant Kohlberg Kravis Roberts & Co. for the $1.8 billion acquisition of South Korea’s Oriental Brewery from Anheuser-Busch InBev, Asia’s biggest private equity deal last year.

In China, Affinity competes with CITIC Capital, which recently announced it has raised $925 million for its second China-dedicated buyout fund.

In late 2009, Affinity closed a $200 million buyout deal with a Beijing-based component manufacturer, making it the second and biggest investment for Affinity in China, where, according to the sources, the fund would be more conservative and cautious as deal valuations may be too high to be competitive.

In late 2009, Affinity opened an office in Jakarta and hired Inghie Kwik as its country head. Kwik, a well-connected local dealmaker, worked for Morgan Stanley as head of its investment banking business in Indonesia.

In addition to its headquarters in Hong Kong and its Jakarta office, Affinity also operates in Seoul, Tokyo, Singapore and Sydney. —George Chen, Asia Private Equity Correspondent