Asian Private Equity Funds Make Up 25% of Global Assets

The Asia-focused private equity industry has seen significant growth over the past few years, with funds in the region now accounting for one-quarter of the global total assets under management, according to a report from data and intelligence provider Preqin.

The total assets under management for the Asian private equity and venture capital industry was $722 billion as of December 2017, with $667 billion in capital raised by Asia-focused private equity and venture capital vehicles closed since 2010. And the aggregate value of buyout and venture capital deals completed in Asia since 2010 is $626 billion.

“Asia has always played an important part in the private equity and venture capital ecosystem, but its importance was not fully recognized until our recent research efforts,” Christopher Elvin, Preqin’s head of private equity, said in a release. “Although investors have yet to see the same returns of cash in Asia than they have for North America- and Europe-focused funds, Asia-focused private equity funds’ returns rival those of more established regions.”

The firm also said Asia-focused private equity funds have outperformed their North American and European counterparts in recent years, posting returns of 12% or higher for 2010 to 2015. And the funds hold an estimated $246 billion in dry powder, or assets that have been raised, but not yet invested, which also accounted for 25% of the global total.

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Preqin attributed the region’s strong growth to the range of investment opportunities available, and technological innovation, particularly in China. It said Greater China leads private equity and venture capital activity in Asia, with 2,853 fund managers based in the region, nearly double the number of fund managers based in the rest of Asia combined. China also was the largest hub of Asia-based investors, with the country accounting for just under one-third of investors in Asia (32%), while Japan had the second-largest share at 21%.

Preqin’s research also found that despite a year-on-year decrease in the number of Asia-focused funds closed since 2015, the aggregate capital raised has actually risen due to larger funds entering the market. While just 12% of funds closed on $250 million or more in 2013, that proportion has grown to 35% in 2018. Additionally, capital calls reached a record high of $107 billion at the end of 2017, and capital distributions have surpassed $60 billion every year since 2015.

“With record levels of dry powder and aggregate capital raised in the Asian market, the outlook for the industry appears promising,” said Preqin in its report. “Increasing innovation has created more investment opportunities in the region, and in an age of technological breakthroughs, the appetite for innovation shows no signs of slowing.”

Tags: Asia, Preqin, Private Equity, Venture Capital

Kentucky’s controversial pension law came to a head Thursday when the Supreme Court heard arguments from Attorney General Andy Beshear and Steve Pitt, Gov. Matt Bevin’s general counsel, regarding the measure’s legality.

Funded at 31%, with a $40 billion shortfall, Kentucky has one of the shakiest public pension plans in the country. The bill was enacted as a means to shore up the pension system.

The high court’s seven justices questioned Pitt, who is in favor of the law. They wanted to know about whether the bill had been passed by the legislature in keeping with the state constitution’s mandates.

At the heart of the court battle is a requirement that each bill must go through three readings on separate days in each chamber. The law, tucked into an 11-page sewer bill in the last days of the legislative session by the Bevin administration, passed in a matter of hours the following day. The pension reforms totaled 300 pages.

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Attorney General Beshear, a Democrat, sued the Republican governor immediately after the bill passed. A local judge struck down the legislation in June due to the three-reading clause. Bevin appealed the verdict, bringing the pension reforms to the high court, one of the few times a Supreme Court hearing was on state television.

The new law would cap sick days accrued to be used toward a teachers’ retirement, raise health insurance contributions for state employees hired between 2003 and 2008, and also put new teachers into hybrid cash-balance pension plans instead of a traditional defined benefit plan.

Bevin did not attend the hearing, but posted a series of tweets expressing his sentiments, arguing that teachers would not lose their pensions.

In the Supreme Court hearing, Justice Michelle Keller asked Pitt if the constitutional measure is about informing the public—especially those affected by changes—of “what really is in a bill?”

Pitt replied that the bill’s passage was proper because it bore many similarities to an older version that was rejected earlier in the year, and argued that the legislature is allowed to write its own rules for what it considers a “reading” under the separation of powers doctrine. He added that, if the court axes the pension law, it will create legal issues for other pivotal laws passed similarly.

Pitt told reporters that legislators “knew what they were voting on.”

Beshear countered that argument, saying the process clearly violated the three-reading provision and that the law breaks the “inviolable contract” of the state constitution.

He also argued that it was not possible for lawmakers to read the bill and understand its contents within such a short timeframe.

“There is no way they knew the contents of what they were voting on,” he said.

Beshear told media that “under the constitution, an 11-page sewer bill can’t become a 291-page pension bill and pass in just six hours,” he said.

Beshear is running for governor next year, as Bevin seeks another term.

Kentucky’s Supreme Court will decide the verdict in the coming weeks.

“This is going to boil down to our strict separation of powers in the state and their unwillingness to step back and erode what has been called ‘most strict’ in the firmest separation of powers within the United States,” said Pitt.

Tags: Attorney General Andy Beshear, Governor Matt Bevin, Kentucky, Pension, Steve Pitt, US Supreme Court