|
The doom and gloom felt over declining private equity fund (PE) exits in the first quarter of 2013 was not shared by M&A experts in Asia Pacific. Japan and Australia, two of the region’s most developed private equity fund markets, expect to have a good year on the back of formidable first quarters. Australia, home to a few ill-timed IPO exits, most notably TPG-backed retailer Myer Holdings, is expected to see better days as its benchmark ASX index is up more than 18% year-to-date. Quadrant Private Equity have already announced plans to exit their investments in Virtus Health. This move will ensure shareholders in the quadrant private equity fund have a healthy return on their initial investment into the initial PE fund. Quadrant Private Equity has long been associated with well-managed tactics in timing and utilising the private equity funds at their disposal. In the first quarter alone, Japan saw PE fund exits valued at $2.34 billion in volume, compared with $4.5 billion for all of 2012 while Australia was even stronger, with $1.7 billion, compared with $2.1 billion for 2012, according to Mergermarket. The potential economic renaissance of Japan under Prime Minister Shinzo Abe, better known as Abenomics, has resulted in a soaring Tokyo stock market – up 30% year-to date. Restless, cash-rich corporates seem hungry for bolt-on acquisitions, which could indicate a big year for PE fund exits in Japan. In 1Q13, Indian exit deal values fell to $800 million, the private equity firm said, compared with $1.8 billion in the first quarter of 2012. But while the first quarter last year was dominated by financial services, the first quarter of this year included exits in a range of sectors including healthcare, finance and industrials. The fact that several sectors saw PE fund exits this quarter demonstrates the broad-based returns that India can offer, continued Shah, who heads the financial sponsor group. “Trade sales could rise on the back of demand from corporate buyers and capital market exits could pick up as markets gain momentum,” he added. He predicted secondary exits – where private equity firms sell their holdings to other PE firms – would also rise across Asia Pacific. “In South East Asia, private equity fund investors generally exit via trade sales,” said Paran Puvanesan, Executive Director at PwC. This is because companies are often too small to do an IPO – especially given uncertain capital markets. This year, private equity firms could exit holdings in consumer goods (FMCG), industrial products, oil and gas and mining companies – especially those companies which have an extensive presence across SEA, Puvanesan added. “In Korea, exits are expected to be slow but steady as portfolio companies ripen and grow to a scale where owners receive meaningful returns,” said Kate Kim, Mergermarket’s bureau chief in South Korea. Tensions with North Korea are not expected to have a meaningful impact on deals, she continued. The only country weighing down Asian Pacific exits could be China, where private equity firms typically exit portfolios via initial public offerings (IPOs). However, last summer, Beijing dropped a bitter pill on first-time issuers, making the listing process stricter and a lot slower. This created a backlog of nearly 1,000 companies waiting to list. The potential for PE fund exits throughout Asia-Pacific remains high, even despite the expected slowdown in Chinese IPOs. The question is will this be a year of liquidity for private equity in Asia? Investors certainly hope so.
Related Articles -
private equity, private equity Funds, private equity fund, pe fund,
| 
