Carey Olsen partner James Webb has contributed to Global Legal Insight's guide to the fund finance market in Asia.

Overview of the Asia-Pacific private capital market

A lot has happened in Asia over the last few years.

Total private market investor exposure to Asia has tripled over the past 10 years, and this upward trend is expected to continue, given that Asia still represents less than 10% of global exposure. With Asia GDP forecast to represent just over 34% of global GDP in 2019 and 63% of total GDP growth in 2019, Asia's markets have arguably been underweighted in investors' global allocations, and there is the potential for Asia markets to generate investment on a similar scale to that of Europe over the next 5–10 years.

By the end of 2018, the Asia-Pacific private equity market boasted US$883 billion in total assets under management, representing 26% of the global private equity industry. Private equity funds operating in the Asia market held dry powder totalling US$317 billion, equating to three years of future supply at the current pace of investment.

The year 2017 had been a record-breaking one for fundraising, with 593 Asia-Pacific-focused fund closings. Momentum started to slow throughout 2018, with fewer new fund launches that year (256), which has been partly attributed to global trade disputes and pressure on China-based funds, lenders and investors, to tighten leverage. However, those funds that did manage successful fundraising achieved a higher average size (US$294 million) than the previous year. Despite the relative decline in 2018 fundraisings compared to 2017, it seemed that larger, established funds with a strong track record were still able to raise funds successfully, whereas it was more of a struggle for smaller or newer funds.

Fundraising in 2019 is expected to be lower than previous record highs. However, there is evidence that larger funds with established reputations have still been successful, with new ASEAN-focused private equity and venture capital funds averaging a 117% target fundraising success rate.4 There have also been reports that 2020 will see some of the larger funds in the region return to the market to raise new capital.

This comprehenive guide includes:

  • Investment activity
  • Asia market trends
  • ESG
  • New Cayman regulation
  • Fund finance in Asia-Pacific
  • Asian fund structures and fund documentation for fund facilities: key issues
  • Key legal due diligence points for funds and lenders in the Asia market
  • Outlook for 2020

Download the complete guide here.

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