Affected by global political uncertainty, the private equity market is shifting its focus to opportunities in Asia. Hamilton Lane Co-CEO Kwan Ka-on pointed out at a recent roundtable that amid the current global economic turmoil and uncertainty brought about by tariff policies, the private equity market will continue to attract investors seeking stable returns.
Kwan Ka-on pointed out that the diversified risk exposure of the Asian market makes it a relatively safe investment environment. The long-term nature of private equity also has obvious advantages in the volatility caused by tariffs, and can provide stronger return stability.
In response to questions from Lianhe Zaobao reporters on the market’s “de-dollarization” trend, Hamilton Lane Capital said that Asian institutions currently emphasize “stability, liquidity and accessibility” in currency selection, but there has not yet been a large-scale “structural de-dollarization” configuration shift. However, some partners or investors have proposed that even if the fund itself is a US dollar fund and the underlying assets are also denominated in US dollars, they still hope to establish local currency hedged share classes.
Asia’s private equity fundraising rebounded to more than US$8 billion in the first quarter of 2024
The private equity market lagged slightly behind the public equity market in 2024, partly due to market valuation adjustments and an uncertain policy environment. Nevertheless, Chen Boxuan, co-head of Asia Pacific investment at Hanling Capital, believes that the secondary market and co-investment have shown great potential in the current market environment and have become an important channel for capital flow.
He said: “Secondary market transactions used to be a relatively quiet area in Asia, but now it has become a normalized liquidity management tool, with more and more limited partners (LPs) and general reserves (GPs) participating in it.”
In addition, Hanling Capital also pointed out that fundraising in the Asian private equity market has rebounded from the low point in 2023. In the first quarter of 2024, Asia’s private equity fundraising rebounded to more than US$8 billion (about S$10.3 billion), and the regional market value accounted for about 1.5%. The company expects that as liquidity improves and asset valuations stabilize, private equity funds will flow more to areas with structural growth potential in the future, especially the infrastructure and real estate sectors, and will continue to benefit from this trend.