Axiom closes Asia-focused FoF

Singapore-based Axiom Asia Private Capital has held a final close of $440 million for a fund-of-funds that will invest solely in Asia-based private equity funds.

The fund, which beat its $350 million target, raised commitments from such large limited partners as Ohana Holdings and The William and Flora Hewlett Foundation.

“A significant proportion of our LPs are endowments and foundations who do not typically invest in a fund-of-funds, but are making an exception for Asia,” says co-founder Yewhoh Goh.

Goh and Chihtsung Lam—veterans of GIC Special Investments, the private equity arm of the Government of Singapore Investment Corp.—co-founded Axiom in spring 2006. Another co-founder is Edmond Ng. They have since added Marc Lau.The firm will invest from about 40% to 50% of its fund in buyout funds in Asia. Venture funds and growth capital vehicles will each receive between 20% and 30% of the fund’s allocation.

Lam says that the firm will look closely at the Japanese buyout market. “Japan today is a lot like Europe in the 1990s, where you have a lot of cash-rich industrials that can be made more efficient using private equity,” he says.

China and India have fewer buyout opportunities and a greater opportunity for venture capital and growth financing, Lam says. “There may be too much cash flowing into these areas now,” he says. “We have some concerns about the China VC space. There have been a lot of new firms set up in that segment and it looks very competitive right now.”

But Lam is still optimistic, competition just means he and his team will have to be selective in who they choose to back. The Chinese VC market may end up looking like the U.S. venture market, where a handful of great investors consistently out-perform the industry, Lam says.

Perhaps the best opportunity for private equity to flourish is in Southeast Asia, Lam says. “It’s the one area in Asia that there isn’t much interest but has good fundamentals,” he says. “The flipside of that is that there aren’t many good managers.”San Francisco-based Probitas Partners served as exclusive placement agent for the firm.