Asian Private Equity and Venture Capital Review 2017 13 th annual edition
CONTENTS 1 Introduction 4 Boom before bust? 2 Assets Under Management and M&A 6 Massive M&A 3 Fundraising 11 Flush with funds 4 Investments 20 Sustained high or slackening off? 5 The Exit Environment 25 Terrific trade sales, indifferent IPOs 6 Active Players in the Market 31 China s new champions? 7 Looking Ahead 35 Back to the future? II
INTRODUCTION Boom before bust? After a solid year of activity in almost all departments, and unparalleled M&A volumes, Asia Pacific private equity market participants might look at the end of 2016 with trepidation as well as optimism. A Trump presidency, bringing with it the risk of a China/ US trade war, Brexit and economic dislocation in Europe external macro factors seem increasingly problematic. The cycle of greed and fear is alive and well in the markets, said Jean Eric Salata, Chief Executive and Founding Partner of Baring Private Equity Asia, and veteran investor in the region, when interviewed recently on CNBC, citing weaker growth and less buoyant sentiment in China and across the region. However, he added, our industry tends to do better in times of increased dislocation [and] volatility. Investors appear to agree, and to be putting considerable money behind that bet perhaps even more than the Asia Pacific private equity industry can easily absorb. Consultant and advisory firm Grant Thornton recently calculated the total dry powder held by Asian-focused private equity firms at over $110 billion, a record high. Obviously, that volume is likely to drive increasingly competitive dealmaking across the region as well, conceivably, as an upsurge in secondary buyouts. And with three strong years of fundraising in a row, finishing with record-breaking one in 2016, the situation is only likely to get worse. This against a steady, but not startling, year for investments in 2016. Even though the investment tempo stayed only just behind an exceptionally brisk 2015, there is no sign in 2016 s investment figures at least of a momentum that could really start to dig into that mountain of dry powder. FIG 1.1 Asia - Total Funds Raised Asia III
INVESTMENTS Sustained high or slackening off? Total private equity investments made across Asia Pacific during 2016 fell back by some 5% from the record 2015 total of almost $145.6 billion, to just under $138.3 billion. Despite its dominance of the 2016 fundraising stakes, China saw a 16.7% slide in total private equity investments, from almost $71.5 billion in 2015 to just over $59.5 billion in 2016. Australia, meanwhile, delivered a second remarkable year of investment, up 41.2% from just over $24.4 billion in 2015 to almost $34.5 billion in 2016. India also saw a falloff of 37%, but at least a respectable total, with over $10.3 billion invested in 2016, compared to 2015 s just over $16.4 billion. Investment in Japan, though, soared 211% to the country s highest figure in the past five years, at over $11 billion, compared to just over $3.57 billion in 2015. Japan s sister North Asian economy South Korea saw a 54.5% investment slide over the same period, from almost $ 16 billion invested in 2015 to just under $7.25 billon in 2016. And Hong Kong fell 33.2% from $6.38 billion invested in 2015 to $4.265 billion invested in 2016. FIG 4.1 Asia - By Total Amount of Private Equity Investment 2016 Australasia Greater China North Asia South Asia Southeast Asia 2015 Australasia Greater China North Asia South Asia Southeast Asia 1c IV
THE EXIT ENVIRONMENT Terrific trade sales, indifferent IPOs FIG 5.1 Asia - Private Equity-backed Exits The total value of private equity-backed liquidity events in Asia Pacific rose 16.4% in the period under review, from just over $58.8 billion in 2015, from 599 exits, 492 disclosed, to almost $68.5 billion in 2016, off 531 exits, 414 disclosed. Asia Pacific private equity-backed IPOs, however, fell almost 35% in value, from over $45.65 billion realized in 273 listings in 2015 to just under $29.8 billion from 245 billion in 2016. Amount No. of Deals FIG 5.2 Asia - Private Equity-backed IPOs Funds Raised No. of IPOs 25