The year 2023 was a difficult one for global private equity firms looking to raise capital as tight monetary policies resulted in a liquidity crunch. And Southeast Asia-focused fund managers, too, were not entirely unscathed.
Six PE funds focused on the region secured their final closes last year, of which five failed to meet their original fundraising target, according to DealStreetAsia DATA VANTAGE‘s recent report Private Equity in SE Asia: H2 2023 Review.
Unlock the Private Equity in SE Asia: H2 2023 Review report for only $299 or upgrade to Premium Plus subscription for greater savings and enjoy full access to up to 36 research reports a year, all for just $1200 ($100/month).
For instance, Growtheum Capital, which was seeking $600-800 million for its debut fund, closed it at $567 million in August. Growtheum Capital’s debut fund was also the biggest PE fund to close in 2023.
Meanwhile, Asia Partners failed to reach the $600 million target for its second fund, instead closing it at $474 million in December. In a similar vein, The Asia Energy Transition Fund, managed by SUSI Partners of Switzerland, closed at $120 million in June, falling short of its $250 million goal.
Novo Tellus Capital was the only exception—it managed to surpass its initial target by 36%, securing $510 million for its third fund. “The consistency of our investment strategy and our strong track record of generating proprietary deal opportunities with top quartile returns played important roles. I believe that our ability to emphatically work with management teams to transform their businesses versus generating returns through de-leveraging differentiates our investment strategy,” said Wai San Loke, Co-founder & Managing Partner, Novo Tellus Capital Partners.
As a result, fund managers launching new funds are now setting more modest targets. “A spate of new funds are entering the market with significantly lower and more pragmatic fundraising objectives… This judicious scaling back of ambitions reflects fund managers’ recognition of prevailing market uncertainties and a deliberate shift towards more conservative, achievable goals,” the report said.
Case in point: DealStreetAsia reported recently that Southeast Asia-focused Dymon Asia Private Equity is in the market looking to raise $500 million for its fourth fund. This is smaller than its predecessor Dymon Asia Private Equity Fund III, LP, which closed in 2022 at a hard cap of $650 million.
SE Asia funds hold up
The six private equity funds that held their final close in 2023 raised a cumulative $2 billion in capital from their limited partners (LPs). This was on par with the previous year’s tally of six fund closes and a $2.1 billion haul.
This suggests PE fundraising in the region stood in stark contrast to the global PE fundraising landscape, which witnessed a precipitous decline last year. According to Preqin data, the global PE market experienced an 11.5% year-over-year decline in fundraising value, hitting its lowest level since 2017. PE fund closes worldwide also dropped to its lowest point since 2015.
As the global economy continues to grapple with uncertainties, the ability of Southeast Asia-focused funds to maintain a steady fundraising momentum highlights the region’s continued relevance as an investment destination, said the report.