Hong Kong-based Baring announced that the new vehicle would invest in alternative energy, media, financial services, consumer and industrial sectors. Less than one-third of the fund has already been invested, according to CEO Jean Eric Salata, who noted in a press conference last week that deal flow was the strongest it had been in years as mid-market companies in Asia lack alternatives for funding amid volatile financial markets.
“The IPO markets, as most of you know, are essentially closed right now except for a very limited number of companies … and the banks have tightened credit both in China and in India,” Salata said. “There’s probably more demand than we anticipated. We feel the timing is actually quite good for this fund as far as the ability to invest.”
Salata said limited partners in the new fund included the Ontario Municipal Employees Retirement System, Partners Group, University of Texas Endowment, U.K.-based Universities Super Annuation Scheme and Goldman Sachs Asset Management.
The private equity industry in Asia largely shrugged off last year’s global credit crunch, with assets under management, fund-raising and investment rising at double-digit levels, according to data from the Asian Venture Capital Journal, which is not affiliated with Thomson Reuters.
AVCJ said Asian private equity funds under management rose by 14% to $190.7 billion last year, while new investments rose 33% to $84.2 billion in 2007 and funds raised to invest in the region rose more than 23% to nearly $51 billion.
Still, Salata said that returns were unlikely to match the performance of its third fund, which closed in August 2006 and raised $490 million. That fund had a net internal rate of return of 126% as of the end of March, Salata said.
“What Asia has going for it is that underlying growth in businesses here is higher, and that should drive higher returns,” Salata said. —Thomson Reuters.