Some might describe the general malaise that hung over the Asian economy as a crisis of confidence. It was as if Yogi Bear was successfully stealing picnic baskets every day for an entire decade, with Ranger Smith nowhere in sight to put things in order,. But now, many U.S. investors have put their faith in the Chinese and Indian manufacturing and service sectors and now investors seem to be clamoring to invest in Asia. As not to be outdone by counterparts in Europe or North America, CVC Asia Pacific announced its plans to raise a $1 billion fund, the firm’s second dedicated Asia fund.
The new fund, CVC Asia Pacific II, will follow CVC’s first Asian fund, which closed in 2000 with more than $845 million and is approximately 80% invested. CVC Asia Pacific II will invest in buyout deals in Australia, China, Japan, Singapore and South Korea.
The Hong Kong-based firm is a subsidiary of London’s CVC Capital Partners. CVC Capital Partners’ LPs include Alaska State Pension Investment Board, Bank of Scotland, CalPERS, CoPERA, Fleet Equity Partners, Illinois Municipal Retirement Fund, New York State Comptroller’s Office, Oregon State Treasury, Pacific Corporate Group, the University of Chicago and the World Bank/IFC.
According to Thomson Venture Economics (publisher of Buyouts), CVC has closed on 20 private equity deals in Asia since early 2000, all but two of them being buyouts. One of its more recent deals was the December 2003 buyout of Melbourne, Australia-based health care provider Affinity Health. Other companies in the firm’s buyout portfolio include the South China Printing Co., Tower Records Japan and Wong’s Circuits.
The announcement comes on the heels of a study released in late January by Asian Venture Capital Journal, which found that new private equity funds raised by Asian firms grew by 11% in 2003, raising a total of $3.3 billion. Japanese buyout funds led the growth, and private equity investors put $7.3 billion into the land of the rising sun.
Other funds are getting under way, promising an invigorating shot in the arm to Asian private equity. Baring Private Equity Partners Asia (BPEP Asia) recently began looking for its third fund. Baring Asia Private Equity Fund III has a target between $300 million and $400 million with plans to invest in between 10 and 20 buyout deals located primarily in China, Hong Kong, India, Singapore and Taiwan, with 50% of the fund going into investments in China. Affinity Capital, Asiavest Partners and GS Private Equity all Asian private equity firms are planning to raise new funds also.