 "PE fundraising activity in China, India touches $52 bn")
The aggregate capital raised by the Chinese and Indian PE markets in 2012 touched $52 billion, registering a decline of 13.34% over the corresponding period a year ago.
According to the report titled "Global Capital Markets Perspective," global PE fundraising activity increased in 2012, but it declined in the Asia Pacific region as Chinese and Indian PE markets seem to have hit a "growth wall".
Moreover, IPO exits in the region (Asia-Pacific) became difficult due to what appeared to be weak markets and investors shying away due to high valuations.
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"India, in particular, failed to perform in the buyout and M&A market, apparently due to weak stock markets and the crash of the rupee," the report said.
Globally, PE fundraising activity in the second half of 2012 was marginally better than the first half of 2012 as 385 funds raised $170 billion in comparison to 417 funds that raised $165 billion in the first six months of 2012.
Meanwhile, however, the second half of 2012 significantly outperformed the second half of 2011, wherein 473 funds raised $144 billion, Deloitte added.
The report further noted that investor appetite in countries outside China and India is increasing, as emerging South-East Asian countries like Malaysia, Indonesia, Thailand, and the Philippines have a burgeoning middle class and a relaxed regulatory environment.
Moreover, PE firms can control investments in these countries and buy 100% stake in the target companies, whereas in India and China a vast majority of the deals are in growth equity.
Australia is also gaining traction as a favorable PE destination, particularly for buyout deals, due to greater transparency and well-developed capital markets.
Going ahead, 2013 may be an improvement on 2012 in terms of number of funds exceeding their targets with 55% of funds that have held a final close until March 2013 surpassing targets.
Moreover, fundraising activity is likely to increase in 2013 as Limited Partners (LPs) received strong returns in 2012, and are likely to seek more in 2013, the report noted.