APAC guide: Devil in the detail

There is no arguing that 2018 has got off to a much more positive start for Asia-Pacific
fundraising than previous years. Over $12 billion has been raised via seven closed-end private real estate vehicles so far this year, surpassing the $10.7 billion raised in the whole of 2017.

It is true fundraising volumes are still far off the record $19 billion raised in 2013, but we are also at a much loftier point in the cycle coupled with political and macro uncertainties. Blackstone’s massive $7.1 billion raise for its second Asia opportunistic fund this year added significant heft to the overall tally, as did substantial capital hauls by managers running successful regional and pan-Asia fund series, including PAG, Fortress, LaSalle and sector specialist GLP.

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All these names feature prominently in PERE’s latest ranking of the top 15 managers raising capital for Asia-Pacific-focused funds. However, a deeper analysis of the data somewhat dampens the overarching positive sentiment. For one, it is taking much longer to close funds. According to PERE data, managers took an average 21 months, from launch to final close, to raise their APAC-focused vehicles in H1 2018, the longest of any year since 2010. Fewer US-based managers are in the market currently, although this could also be a function of their fundraising timelines. In 2016, when PERE last published this report, 43 percent of the funds in the region were manged by US-based firms; that has dropped to 27 percent. Consolidation continues, with fewer managers raising bulk of the capital.

What is particularly noteworthy is the absence of any significant core and debt-focused
fundraises. Not one single core or core-plus fund in Asia has announced a final close this year so far, while historically 20 percent of the total capital raised since 2010 was raised for the low risk/return strategies. Open-ended funds continue to coral capital in the region, but those are limited in number. The tide appears to be swaying in favor of more risk, with 68 percent of the capital raised for opportunistic investments.