Baring Private Equity Partners Asia has closed Baring Asia Private Equity Fund II LP at $257 million, the largest fund raised in Asia this year. Initially, the firm had planned on closing Asia Fund II with $350 million to $400 million under management but then lowered its target to $300 million in June.
Jean Eric Salata, a managing partner with Baring Private Equity Partners Asia, is happy with the closing, despite the fund falling short of its second target. “With stock markets down 50% to 80%, the purchasing power of a fund today is two-to-three times an equivalent amount invested prior to 2001. Achieving a fund that is about 15% lower than our last fund we think is a good result,” he says.
Its first fund, Baring Private Equity Partners Asia I, closed with $300 million in its coffers in 1998 and invested in 27 companies. Asia Fund I is fully committed.
Following it path, Asia Fund II will invest about $10 million to $25 million over the life of an investment. About one-third of the fund’s capital is devoted to early-stage deals, another third will go to later-stage expansion rounds and the remainder will be used to finance buyouts and corporate restructurings.
“We have a multi-stage investment strategy, which covers early-stage, expansion and buyouts. Right now, we see the best value in buyouts and expansion,” says Salata. “Our primary focus now is on asset sales and divestitures by overseas corporates who are restructuring or in financial distress and are selling their Asian businesses. We are also very upbeat about the deals we are seeing in China and expect to provide expansion capital to Asian, U.S. and European companies that are expanding into China.”
While China is a hot expansion area, the Fund will also invest in the North Asian markets of Hong Kong, Taiwan, Korea and Japan, as well as in India and Singapore.
In fact, Salata says, the opportunities all over Asia are good. “From a pricing perspective, the last time I saw buying opportunities like this was during the Asian financial crisis. From a macro perspective, there are two strong forces at work: The growth in China is driving business earnings in domestic Chinese private sector companies, and global outsourcing trends are underpining growth in Asian low-cost manufacturing and services,” he says.
Investors who participated in Asia Fund I, including Singapore’s Government Investment Corp., Invesco Private Capital Inc. and CDP Capital, also came in on this fund. As of June 30, Asia Fund II had already made about 10 investments and expects to have about 25 portfolio companies when the fund is fully committed in about three years.
Contact Danielle Fugazy