APAC alternative markets see Japan and India increasingly drive investor interest — Preqin reports
LONDON, June 24, 2024 (GLOBE NEWSWIRE) -- Preqin, the global leader empowering the alternatives community with essential data and insight, today published its Alternatives in APAC 2024 report, covering regional analysis and country-specific insights for Greater China, India, Japan, South Korea, and Australia. The report shows that while the short-term outlook for the Asia-Pacific (APAC) region may appear cautious, driven by sluggish fundraising and geopolitical challenges, Preqin analysts maintain a positive outlook for the region over the long-term.
The view is that long-term investors will continue to be attracted by the fundamental growth potential of emerging markets like India and Southeast Asia, where early-stage venture capital (VC) opportunities are in abundance, and the developed markets of Japan and South Korea with their attractive real estate markets.*
The report also highlights a clear trend where investors increasingly favor experienced fund managers, over first-time fund managers, in the APAC region. In 2023, the gap between the average capital raised by the two groups reached its widest since 2015, at a staggering $78mn according to Preqin data. In fact, experienced managers raised almost $180mn on average, the highest since 2015, while fundraising by first-time managers was over $100mn.
Japan and India markets emerge as bright spots for investors
While most single country-specific funds struggled with fundraising, the total capital raised for Japan in 2023 was $11.8bn, exceeding 2022 by 13.4%. This was mainly driven by some larger-than-usual private equity fund closures. The country’s accommodating interest rate and weaker yen supported the deal market's growth in 2023, as private capital deal value achieved a five-year high of $34.8bn, exceeding the previous peak in 2021 and putting it nearly on par with China as one of the most active private equity markets in APAC. Meanwhile, for India, Preqin analysts hold a positive long-term outlook for this market. Private capital grew remarkably, doubling in the last five years to outpace other Asian countries, and private debt in India has the largest single-country AUM in APAC.
Angela Lai, VP, Head of APAC and Valuations, Research Insights, at Preqin, says: “The APAC region has not been spared from the global macroeconomic headwinds that plagued the global market in 2023. But while the region’s fundraising may have reached a decade low and most country-specific funds struggled to raise capital, demand for Asia-regional funds grew amid investors’ stronger preference for diversification and reduced risk appetite.”
Additional key findings include:
- Capital raised by APAC ESG funds falls harder than global average: Global environmental, social and governance (ESG) fundraising fell by 38% from 2022 to 2023, and APAC was hit hardest, declining by 77%, with aggregate capital raised dropping from $13.5bn to $3.1bn. The proportion of ESG funds closed in APAC has continued to decline. APAC made up 14% of funds closed in 2021, and this fell to 6% of funds closed in 2023, during which time the global number of ESG funds closed fell 10%.
- APAC office sector supported by healthy demand: The North Asian office market is becoming a focal point for deals. In 2023, office transactions accounted for 39% of total deal value and 53% of the total number of deals in APAC. South Korea, in particular, experienced high demand as the vacancy level fell below 3% for Grade A office space in Seoul. Office deals also picked up in Japan in the first quarter of 2024, positioning it ahead of South Korea as the most active APAC market for office assets.
- Lowest year for fundraising in a decade: Fundraising in APAC dropped significantly, reaching a decade low, both in the number of funds closed and the total amount of capital raised owing to geopolitical tensions and rising interest rates. Funds in 2023 raised around $27bn on average, substantially lower than the five-year average of $69.5bn. While Greater China-focused fundraising dramatically declined in 2023.
Note to editors:
Currency is USD
* According to key findings from the Preqin Future of Alternatives 2028 report
If you would like more information or would like to speak with the report author, please contact Mimi Celeste Taylor at mimiceleste.taylor@preqin.com
About Preqin
Preqin, the Home of Alternatives™, empowers financial professionals who invest in or allocate to alternatives with essential data and insight to make confident decisions. It supports them throughout the entire investment lifecycle with critical information and leading analytics solutions. The company has pioneered rigorous methods of collecting private data for over 20 years, enabling more than 200,000 professionals globally to streamline how they raise capital, source deals and investments, understand performance, and stay informed. For more information visit www.preqin.com.