Private equity activity in the Asia-Pacific region surged to record levels in 2014, bouncing back strongly after two years of declines, said Bain & Co. in a report released Tuesday.
Deal value in the region totaled $81 billion, up sharply from $50 billion in 2013 and an increase from the previous high of $77 billion in 2007.
The value of exits, including initial public offerings and trade sales, likewise hit an all-time high of $111 billion in 2014, more than double the prior year's $51 billion, the Bain report said. China's re-opening of its IPO market, following its temporary closure the year before, was a major contributor to that surge.
Meanwhile, long-suffering investors in private equity funds focused on the region finally enjoyed some payback. For the first time since the company began following private equity in the Asia-Pacific region, “Bain found that limited partners became cash flow positive,” getting back $1.20 for each dollar called by general partners, the report said.
The Greater China market — China, Hong Kong and Taiwan — was the main engine of growth, with $40 billion in deals, up 182% from the year before. Korea saw the next strongest gain in deal activity, with a 34% gain to more than $10 billion.
The Bain report cited factors ranging from rising asset prices to growing competition as reasons why building on the momentum seen in 2014 could prove challenging.
But on balance, the report said there's “plenty to feel good about,” even if general partners will need to work harder to create value in the companies they invest in to extend the market's growth.
