Private Capital Market Update

Transcription

1 Private Capital Market Update 2 nd Annual Asia-Pacific Fund Finance Symposium Christopher Elvin, Head of Private Equity 13 th June 218, Hong Kong

2 About Preqin Private Equity & Venture Capital Hedge Funds Real Estate Infrastructure Private Debt Natural Resources Data available via online databases, publicalons and research reports Clients include over 6, industry professionals from 16, firms San Francisco New York London Guangzhou Hong Kong Manila Singapore

3 Market Update

4 GLOBAL PRIVATE CAPITAL AUM AT A RECORD HIGH - $5.1TN AUM ($bn) Global Private Capital AUM by Asset Class, Dec 21 to Sept 217 AUM ($bn) 1, APAC-Focused Private Capital AUM by Asset Class, Dec 21 to Sept Private Equity Real Estate Private Debt Infrastructure Private Equity Real Estate Private Debt Infrastructure

5 Stellar Fundraising ConXnues -$848bn Raised in 217, APAC- Focused Fundraising Reaches new Highs - $139bn Aggregate Capital Raised ($bn) Global Private Capital Fundraising by Asset Class, YTD YTD Private Equity Real Estate Private Debt Infrastructure Natural Resources Aggregate Capital Raised ($bn) APAC-Focused Private Capital Fundraising by Asset Class, YTD YTD Private Equity Real Estate Private Debt Infrastructure Natural Resources

6 DistribuXons ConXnuing to Outstrip Call-Ups and Drive Fundraising Private Capital Calls & DistribuLons, 2 Sept 217 Capital Called/ Distributed ($bn) Jan - Sept 217 Called Up DistribuLon Net Capital DistribuLon

7 Record Levels of Capital to Invest - $1.8tn Globally, $321bn focused on APAC 1,8 Global Private Capital Dry Powder, 21 Mar APAC-Focused Private Capital Dry Powder, 21 Mar 218 1,6 3 1,4 Dry Powder ($bn) 1,2 1, 8 Dry Powder ($bn) Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Dec-1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Mar-18 Private Equity Real Estate Private Debt Infrastructure Natural Resources Private Equity Real Estate Private Debt Infrastructure Natural Resources**

8 Challenging Deal Environment Remains APAC PE-Backed Buyout Deal AcXvity, YTD No. of Deals Aggregate Deal Value ($bn) No. of Deals Deal Value ($bn)

9 Challenging Deal Environment (cont) APAC Real Estate Deal AcXvity, YTD APAC Infrastructure Deal AcXvity, YTD No. of Deals Aggregate Deal Value ($bn) No. of Deals Aggregate Deal Value ($bn) No. of Deals Deal Value ($bn) No. of Deals Deal Value ($bn)

10 Ongoing Rise of VC in Asia APAC Venture Deal AcXvity, YTD No. of Deals Aggregate Deal Value ($bn) No. of Deals Deal Value ($bn)

11 12,5 AcXve InsXtuXonal Investors Globally

12 Changing LP Landscape Family Office Fund of Funds % of Capital Commibed to the Average Private Equity Fund Closed by Investor Type, Make-up of Investors in Private Equity by LocaXon, 213 vs % 5% 57% 53% Insurance Endowment Plan FoundaLon SuperannuaLon Government ProporLon of Investors 4% 3% 2% 1% 25% 25% 13% 9% 8% 9% Jan-13 Jan-18 Other % 5% 1% 15% 2% 25% 3% ProporLon of Capital Commided % North America Europe Asia Rest of World Investor LocaLon

13 Challenges

14 Challenges Today Investor Views on the Key Issues in 218 Fund Manager Views on the Key Issues in 218 ValuaLons Fees Performance Deal Flow Market VolaLlity % 2% 4% 6% 8% 1% ValuaLons Performance Deal Flow Market VolaLlity Fee Pressure % 2% 4% 6% 8% 1% Natural Resources Infrastructure Private Debt Real Estate Natural Resources Infrastructure Private Debt Real Estate

15 LPs Views on Credit FaciliXes Perceived Benefits of Credit FaciliXes Cash flow management i.e. provide more regular, 59% Concerns Regarding Credit FaciliXes Fund performance comparability AddiLonal expense Liquidity risk 27% 42% 59% Reduce administralve burden i.e. prevent 47% Clawback issues 22% CompeLLve advantage to GPs i.e. ability to move 45% No concerns Tax consideralons 15% 14% No benefits 17% Legal risk 1% % 2% 4% 6% 8% 1% % 2% 4% 6% 8% 1%

16 Outlook

17 Record Number of Private Capital Funds in Market 1,82 ($36bn) Focused on APAC 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Private Capital Funds in Market, Jan 215 to Apr 218 2, ,651 2, ,8 3,484 3,869 1,263 1,379 Jan-15 Jan-16 Jan-17 Jan-18 Apr APAC-Focused Private Capital Funds in Market by Type, June No. of Funds in Market Aggregate Capital Targeted ($bn) No. of Funds in Market Aggregate Capital Targeted ($bn)

18 Performance MeeXng LP ExpectaXons Median Public Pension Fund Net Returns by Asset Class (As at June 217) ProporLon of Respondents 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Investor Views on Porholio Performance Over the Past 12 Months RelaXve to ExpectaXons 26% 69% 5% 12% 6% 29% 22% 25% 25% 66% 68% 65% 12% 7% 1% 18% 61% 21% Fallen Short of ExpectaLons Met ExpectaLons Exceeded ExpectaLons

19 InsXtuXonal Plans for 218

20 InsXtuXonal Plans for Longer Term

21 Private Capital Fund Managers Confident in Finding Value Amount of Capital Fund Managers Plan to Deploy in 218 vs. 217 Private Equity Real Estate 66% 64% 27% 3% 7% 6% More Capital Infrastructure 74% 24% 2% Same Amount of Capital Private Debt 77% 2% 3% Less Capital Natural Resources 7% 29% 1% % 2% 4% 6% 8% 1%

22 Key Takeaways Global Private Capital in robust health: Ø Record AUM Ø Strong fundraising set to conlnue driven by net distribulons BUT. Ø Ø Ø Capital is becoming increasingly concentrated Challenging deal environment Clear concerns over high pricing & impact on future returns PosiXve Outlook: Ø GPs confident of finding value and looking to deploy more capital Ø LP expectalons being met & LPs remain commided & many looking to increase exposure