US Private Equity Biggies To Raise More Money For Investing In Asia
It seems US sub-prime crisis is turning out to be a boon rather than a bane for fundamentally stronger markets in Asia. A host of private equity biggies - like Carlyle and JPMorgan - are now training their investment flows towards high growth markets in Asia - like China and India. According to a Bloomberg report, Carlyle Group, the world’s second-biggest private-equity firm, plans to raise as much as $4 billion to invest in Asian companies. The Washington-based buyout fund is targeting countries like China, India and Australia, the report said. It expects to complete fundraising for Carlyle Asia Partners III by mid this year.
Leading global investment bank JPMorgan had earlier said that it would allocate $750 million more to private-equity investments in the Asia-Pacific region for taking non-controlling stakes in companies.
Besides JP Morgan and Carlyle, another fund, Charlemagne Capital, is seeking to raise $100-150 million for the launch of a BRIC private equity property fund, according to a report in Thomson Investment Management news (subscription required). On the Indian property market, Jayne Sutcliffe, CEO for Charlemagne, the emerging markets specialist investment house, said: “‘I think there are probably some very good opportunities on the distressed side but…we see some great opportunities in the property market, particularly in these big economies like India and China where you have this growing middle class.”
Economists Too Upbeat About Asia
According to International Monetary Fund estimates, developing Asian economies will grow at an average 8.6 percent this year, compared with 1.5 percent for the US. But that is not a surprise. But what is interesting is that the region is largely insulated largely from the US credit crisis.
Shantayanan Devarajan, World Bank Chief Economist for South Asia, said at the recently concluded 2008 World Economic Forum in Davos: “The current subprime mortgage crisis in the United States will not seriously impact South Asian countries. The impact will be mild because of the structure of the region’s trade and financial flows, and partly because of compensating effects.”
Devarajan attributed three factors that work well for the South Asian countries: 1) Lack of exposure to US mortgage securities; 2) availability of liquidity in domestic markets; and 3) the possibility that lower capital inflows could help countries such as India with macroeconomic management. He drew attention to the fact that the share of South Asia’s trade with the United States has been declining and that the US is no longer India’s leading supplier.
In this context, it’s likely more US and European funds will look at emerging Asian markets like China and India to invest.
