Small private equity fund dwindling in Asia to “Brand Name Funds”

Often entrepreneur turn to privater equity fund for start ups. For the latest on private equity fund in Asia, Private Equity International reports; Data shows that Asia-focused funds targeting less than $1bn are raising a dwindling portion of the overall fundraising pie as they decline in number. Funds $1 billion and above are raising an increasingly larger share of total capital for Asia at the expense of sub-$1 billion funds, according to data from PEI‘s Research & Analytics division. In 2010, big funds accounted for 33 percent of the total amount raised for Asia. In 2012, the figure was 54 percent, the data shows. At the same time, the number of small funds (sub-$1 billion) have been cut in half since 2010 while the number of $1 billion-plus funds have stayed roughly the same. Javad Movsoumov, executive director at UBS private funds group in Singapore, attributes the trend to survival bias – funds may start in the sub-$1 billion range but if they are successful each subsequent vehicle raises a larger amount. “If you don’t perform well, you typically don’t raise the next fund. Therefore the more successful funds in time move over the $1 billion mark in terms of amount of capital raised.” “Successful funds rarely go down in size, but typically go up. In Asia there have been cases where a fund has doubled or tripled in size over a number of fund raising cycles,” Movsoumov said. However, Dennis Montecillo, CEO & senior managing director of Diamond Dragon Advisors, believes survival bias is only part of the story. The weak fundraising environment in combination with investors’ budget cuts in travel and hiring “is making it harder for them to take a chance on a high quality but smaller or newer – though not necessarily a first-time – fund. Investors are defaulting to the larger brand names as a result.“ (Source)


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