APAC private debt rises, India raises $2.3 bn in Q3 alone: Report

APAC private capital fundraising hits five-year low: Preqin report

APAC’s (Asia-Pacific) private capital fundraising slowed in the first three quarters of 2024, with $77 billion raised, down from $83 billion during the same period last year. In terms of deal activity, both APAC private equity (PE) and venture capital (VC) have stabilised at around a five-year low, according to Preqin's latest report.

 

However, India remains a key market within the APAC region for private debt, the report said. In the September quarter (Q3), private debt fundraising reached $2.3 billion, more than doubling from $1.1 billion in Q2, with nearly 70 per cent of APAC’s private debt capital in 2024 so far raised by India-focused and Asia-regional funds.

 

 

Investor sentiment toward India’s private debt market remains positive, with over a third of surveyed investors identifying it as the leading emerging market for opportunities in this category, the report added. Unlike private equity, private credit firms raise funds from investors to lend to companies for specific projects.

 

According to EY, a global consultancy firm, India’s private credit market is nearing a milestone, with investments projected to reach $10 billion in 2024. The EY Private Credit Pulse survey in September revealed that private credit investments could reach $5–10 billion in the next 12 months, with India expected to see around $10 billion in transactions in CY2024 alone.

 

In the first half of the year, India’s private credit landscape gained momentum, with the Securities and Exchange Board of India registering 13 new Alternative Investment Funds (AIFs) focused on credit and special situations, with more likely awaiting approval. Several major players announced multi-million-dollar closures with strategies across buyouts, refinancing, mergers and acquisitions, secondary loan sales, and portfolio restructuring.

 

Elsewhere in the APAC region, the Preqin report noted that APAC-focused PE fundraising dropped to $7.1 billion in Q3 2024, marking a 56.7 per cent decline from the previous quarter and the lowest level this year. While investor demand in Asia-regional funds was strong over the past three quarters, no such funds closed this quarter.

 

APAC-focused VC fundraising reached a new low, with $3.9 billion raised—a 29.1 per cent decline from the previous quarter. Nearly a third of this funding targeted China-focused integrated chip and AI funds, including Xiaomi Ventures’ $1.4 billion Beijing Xiaomi Intelligent Manufacturing Equity Fund, which secured capital from a government agency.

 

According to the report, this downturn reflects broader market hesitancy, concentrating funds around fewer managers and markets.

 

While fundraising stalled, Japan led the region in private capital exits, with buyout volumes reaching a five-year high. Driven by favourable economic conditions, Japan accounted for 37 per cent of APAC exits, appealing to investors with low interest rates, improved corporate governance, and relatively low competition for assets.

 

“Deal flow in Japan’s buyout market, now the most active in APAC by deal volume, is expected to sustain healthy valuation growth, as well as a robust exit environment,” said Angela Lai, VP, Head of Performance & Valuations, Research Insights, Preqin.

 

The report stated that China’s private capital market remained muted amid cautious investor sentiment, although a recent monetary stimulus triggered a stock market rally, potentially opening new opportunities for hedge funds.

 

“We expect the telecom and renewable energy sectors to continue to be the cornerstone in deal activity within APAC, as markets expand to support growing demand for artificial intelligence, 5G connectivity, and green energy,” the report stated.