Private Equity - Industry - Asia Pacific Market, Share and Trends 2023-2028

Summary of Private Equity

The private equity (PE) industry in Asia-Pacific (APAC) has seen robust growth over the past decade, driven by economic expansion in the region as well as increased investor appetite for alternative assets. APAC PE funds raised a record $306 billion in 2022, a 10% increase over 2021.

Continued economic growth and emergence of technology hubs across APAC— especially in China, India and Southeast Asia—offer abundant investment opportunities in sectors like technology, healthcare, consumer products and financial services.

Rising middle class and rapid urbanization leading to attractive consumer market opportunities. Maturing startup ecosystems in APAC resulting in more late stage tech investment opportunities. Ongoing regulatory reforms in markets like China, India and Japan around areas like foreign investment regulations, making these markets more accessible.

Increasing limited partner (LP) allocations to APAC – with global LPs eager to tap into the region’s growth potential. LPs include public pension funds, sovereign wealth funds, insurance companies, endowments and family offices.

The APAC PE landscape remains fragmented compared to Western markets, with independents and captive investment arms of corporations and financial institutions dominating. However, there has been increasing participation from global PE firms. Notable APAC PE deals in 2022 included KKR and CDH Investments’ $15.5 billion take-private of Philips’ Domestic Appliances business, and Hillhouse Capital and Sequoia Capital China’s $8 billion investment into biotech firm BeiGene.

Going forward—APAC PE firms will continue targeting fast-growing technology and consumer sectors. However— they face risks around geopolitical tensions, rising interest rates, and post-pandemic economic slowdowns across APAC markets. Overall— the region remains a bright spot for global PE investment given its immense growth potential.

Recent Trends and Insights

Technology and other new economy sectors like healthcare and consumer now make up over 50% of APAC PE investment, versus 34% a decade ago. Firms are eager to tap into the region’s burgeoning startups and tech unicorns like Bytedance, Grab, Gojek and Traveloka.

Deal values involving foreign PE firms investing into APAC reached $63 billion in 2022. Overseas firms are attracted by local market knowledge and deal pipelines offered by domestic PE firms in markets like China and India. Collaboration allows co-investments across multiple funds. However— geopolitical risks and nationalist policies have hindered certain cross-border capital flows.

The APAC PE sector saw over 250 funds close in 2022 – but is still relatively unconsolidated compared to the US and Europe. Many smaller & domestic funds are now consolidating or fundraising together as larger pools of capital become necessary to compete for deals. This is increasing average fund sizes and professionalization.

Use of Chinese renminbi as a fundraising currency is increasing, both domestically and overseas. This is driven by the Chinese government’s support for renminbi internationalization. In 2021, renminbi funds made up 36% of total APAC fundraising, compared to less than 25% in 2019. Investors are attracted by potential currency appreciation.

Adoption of ESG policies and impact investing mandates by APAC PE firms is accelerating, in line with global trends. Over 90% of funds now claim to integrate ESG when compared to just over 50% in 2017. Key drivers include rising LP demands and regulatory pressures like carbon reduction policies, especially in China.

Product Insights

In terms of products— APAC private equity firms have been raising bigger funds targeting control buyouts, while also expanding into specialized sector-focused strategies.  There is growing appetite for bigger regional/country-specific funds that can lead larger control buyouts. These single-country or pan-regional “megafunds” raised over $60 billion in 2022 – with a record $29 billion raised.

China-focused funds alone. Top performers include PAG Asia Capital, CDH Investments and Boyu Capital. Investors are attracted by the consolidated pools of capital allowing funds to compete for bigger deals.

Many PE firms now run specialized vertical funds alongside core diversified funds, targeting high-growth APAC sectors like technology, healthcare and consumer/retail. Recent examples include— Affinity Equity Partner’s $8.8 billion Asia Pacific Health Fund, and PAG Growth’s $3.5 billion Asia-focused tech fund. This allows more tailored value creation strategies.

PE firms are offering more co-investment and managed account options to LPs, which offer greater control over portfolio customization and liquidity options. Adoption is increasing with overseas LPs looking to tailor APAC allocations. Enables LPs to double down on specific deals/sectors along fund investments.

Distressed asset investing is an emerging strategy for APAC PE firms given markets like China and India have not seen major waves of bankruptcies/restructuring historically. But with rising interest rates and slowing growth, more assets are becoming distressed. Firms like JC Flowers and Baring PE Asia have launched turnaround funds targeting complex deals.

With APAC’s surging startup ecosystem – many PE firms now run growth equity style funds focused on large Series B/C startup investments with more minority stake, venture-type deals of $50-250 million. Allows tapping into tech unicorn pipeline early with more flexible hold periods before IPO.

Key Companies

Some major players within this vast domain of industry are

• Carlyle Group
• Blackstone Group
• Everstone Group
• KKR
• Nippon Sangyo Suishin Kiko Ltd.
• Bain Capital
• Warburg Pincus
• J-Star
• CVC Capital Partners
• TPG Capital

Regional Analysis

China saw the highest PE investment value in 2022 at $156 billion, driven by its large economy and technology sector depth. However— investment dropped over 35% from the 2021 peak amidst regulatory tightening and economic slowdowns.

China dominates APAC PE with over $1 trillion assets under management, focused heavily on domestic tech/consumer plays. However— ongoing government intervention around sectors like: edtech, gaming and financial technology have dampened investment activity and returns, while challenging political relations with US/Europe are concerning some LPs around capital controls. Many firms are now looking to diversify into other emerging APAC economies.

India saw all-time high PE investment in 2022 and is benefitting from rapid growth in e-commerce and financial services. Early stage tech investing is also rising given India’s deep talent pools in sectors like enterprise software, AI and cleantech.

While domestic firms like: Warburg Pincus India and Multiples Alternate Asset Management lead, global firms like: KKR, Carlyle and Softbank are growing exposure. Policy reforms around bankruptcy laws, infrastructure financing and FDI rules have improved investor sentiment despite some protectionist concerns.

India was second at $68 billion – with over 50% tech deals – while Australia saw $30 billion PE investment led by resilient mining and utilities assets. Southeast Asia is also growing with Indonesia, Vietnam and Singapore all seeing record PE investment.

Australia punches above its weight in PE with large pensions and sovereign wealth capital. Mining and infrastructure are mainstays, but tech investing is rising with firms like Blackstone and TPG buying into fast-growing enterprises. Healthcare PE is also robust given Australia’s advanced ecosystem around biopharma and medical devices. ESG adoption is ahead of most other APAC countries with its developed economy status.

Market Segmentation

By Type:

• Buyout funds
• Venture/growth capital
• Distressed/turnaround
• Mezzanine
• Infrastructure

By End User:

• Institutional investors (pension funds, sovereign wealth funds, endowments)
• High-net-worth individuals
• Corporations (corporate venture arms)

By Enterprise Size:

• Large Industries
• Small & Medium Industries

By Country:

• China
• India
• Japan
• Indonesia
• South Korea
• Australia

Our Methodology

We have offered a well-founded review of the Asia-Pacific’s regional Private Equity Industry market along with ongoing trends and upcoming projections to highlight proximate investment opportunities in this report. Moreover, an extensive analysis of any future prospects, challenges, competitors, or navigating aspects is also provided. A methodical detailed regional examination is presented.

Primary Research  

Our multi-pronged research approach includes interviews with industry leaders and a global survey of advanced manufacturing professionals to gain qualitative insights. We utilize our proprietary databases encompassing key performance indicators worldwide in order to collate relevant data points. A multivariate forecasting framework considering historical performance, current dynamics and qualitative factors are utilized to develop market sizing and growth projections through 2029.

We supplement our primary research with a careful examination of secondary materials such as– case studies, news stories and references from other sources. Organizations can benefit from the strategic advice and conclusions offered because they will be better equipped to respond to the dynamic nature of this industry and seize emerging possibilities.

We employ a comprehensive and iterative research methodology focused on minimizing deviation to provide the most accurate market estimates. Our research utilizes a combination of bottom-up and top-down approaches across segments and utilizes databases, primary research insights and industry experts for analysis.

Raw data is obtained from multiple sources and thoroughly filtered to ensure only authenticated and validated sources are considered. We collect data from raw material suppliers, industry associations, technology providers, and buyers to gain a holistic perspective.

Quantitative Analysis

Our market estimates are derived through statistical models, beginning with collection of historical data and analysis of macro- and micro-economic factors influencing the market. Gathered information on market dynamics, technology and pricing trends are utilised to build the models.

Econometric and technological models are applied to project short- and long-term market potential respectively. A bottom-up approach is preferred to minimize errors. Key parameters considered include market drivers and restraints, material pricing trends, regulatory scenarios, and capacity additions.

Weights are assigned to these parameters based on impact analysis and market forecasting is performed via statistical tools and techniques. We believe this methodology results in an accurate and realistic market picture.