Baring Private Equity Asia closed its Baring Asia Private Equity Fund VI at about $4 billion, a record amount for the Hong Kong-based firm and up 60% from the prior fund it closed in 2011.
Jean Eric Salata, CEO and founding partner, said in an interview that a high level of interest from the firm's existing clients lifted commitments for Baring Asia VI to $3.3 billion by October, within four months of the fund's launch. Ultimately, allocations from all investors had to be trimmed to keep the fund within the $4 billion limit the investment team set for comfortably investing client money in the current environment.
U.S.-based pension funds accounted for roughly 55% of the fund's commitments, little changed from prior funds, Mr. Salata said. The next biggest investor segment is sovereign wealth funds — including several based in Asia — which account for roughly 30% of the total. Investors from the Middle East and Europe account for the rest, he said.
Investors in Fund VI include the $44.8 billion Illinois Teachers' Retirement System, Springfield; $24.6 billion Texas County & District Retirement System, Austin; $181.7 billion New York State Common Retirement Fund, Albany; $13.9 billion Los Angeles City Employees' Retirement System; and $8.1 billion Arizona Public Safety Personnel Retirement System, Phoenix.
The Baring Asia team will be deploying that capital at a time when larger companies — and opportunities for more control deals — are coming into play in the Asia-Pacific region. While conceding that such deals are more hotly contested than midmarket opportunities, Mr. Salata said with the region's competitive landscape far less crowded than in the U.S. or Europe, value can still be found “on any size of deal.”
That's especially so for firms willing to take a contrarian stand, Mr. Salata said. Baring Asia's did as much in 2013, when the firm invested more than $1 billion in India, before a political transition last year made investors more enthusiastic about that country's prospects, he said. China could represent a similar opportunity now as concerns about that economy's slowdown or distress in the country's real estate sector leave opportunities on the table for finding good value, he said.
Mr. Salata said the new fund's investment mix should see buyout, or “control,” investments continue to grow at the expense of minority “growth” investments. The mix was roughly 50-50 for the $2.5 billion Baring Asia V fund, up from 60% growth and 40% buyout for the prior fund, he said.
Geographically, China could remain the target for roughly a third of the newest fund's capital, followed by India, and active investments in Japan and Southeast Asia as well. In addition, “cross-border investments” is a growing category for the firm, Mr. Salata said, citing his firm's 2008 buyout of Hong Kong-based “premium school” operator Nord Anglia Education as a prime example. After taking Nord Anglia private for $400 million, and expanding the firm's operations to other countries in Asia, Europe and North America, the firm listed on the New York Stock Exchange in March 2014, and is currently valued at $2 billion, he said.