Waking up some tigers: Is Asia the new frontier for private equity?

Investors are looking east, where spending power is rising, global brands are relocating, and labor is relatively affordable. The Asia-Pacific region is luring alternative investments, specifically, private equity, in an environment of willing consumption.

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                                                   Image source: businessinsider.com

Fund managers and investment groups took note of the upswing in profits last year in Asia. Certain industries, such as education, wines and spirits, and cultural goods have shown themselves ripe for picking. Meanwhile, retail is slightly nipping at investor confidence in Asian countries known for business inefficiencies.

So-called “frontier territories” such as Vietnam, Myanmar, and other emerging markets are also attracting funds, albeit with some modernizing exigencies. There are notable cases of underperforming businesses and companies that have been turned around by the infusion of private equity. Sectors that have most benefited from the boom are media, technology, and telecom. Asia-grown stellar technology startups such as Alibaba, Baidu, and Grab are also galvanizing interest in the region.

Meanwhile, the strongest evidence for the region’s attractiveness to private equity is the entry of four of the largest private equity funds in the global market. These Asian funds from elite financial institutions in China, Japan, and Singapore have a target size of at least $100 billion.

Given these realities, Asia has displaced Europe as a haven for private equity investment, although investment experts warn that such growth might be cyclical, as has been observed in the past.

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                                                             Image source: youtube.com

Gregory Lindae is an expert in venture capital and private equity markets. He has also worked with some of the most prestigious financial companies in the industry such as BlackRock, Salomon Brothers, and FMO. For more reads on the investment industry, visit this blog.