Axiom Asia Private Capital Management Services, LP, an Asia-focused fund of funds, has raised $1.15 billion for the final close of its third fund. Axiom Asia Private Capital Fund III, LP (Axiom III) exceeded its initial target of $950 million but was oversubscribed at hard cap with commitments of $1.4 billion, it said in a statement.

The Singapore-based firm raised $440 million and $950 million for its first and second funds, respectively. The current fund takes the total assets under management of the six-year-old firm to $2.54 billion.

Axiom will invest in a portfolio of management buyout, venture capital, growth capital and other private equity funds in Greater China, India, Japan, South-east Asia, Korea and Australia. It will also make secondary purchases of fund interests and co-invest in portfolio companies alongside underlying funds.

San Francisco-based Probitas Partners was the principal placement agent for the fund, along with MAB Partners (who represented it in the Middle East) and Brookvine (Australia).

Axiom’s lead investors are the William and Flora Hewlett Foundation and Comprehensive Financial Management, according to its website. Its Limited Partners include endowments, foundations, family offices, pensions and financial institutions.

Around three-fifths of the commitments for the current fund came from the USA, with a quarter coming from Europe and the rest from the Middle East.

Chihtsung Lam, Yewhong Goh and Edmond Ng – founders and managing partners at Axiom – were part of the GIC Special Investments before setting up the firm in 2006. The 10 investment professionals at Axiom have committed $7.5 billion to PE funds globally since 1994.

“Given the challenging fundraising environment and uncertain global macroeconomic outlook, we are pleasantly surprised by the strong support from both existing and new investors, which enabled us to do one and only closing of the fund in four months from the launch of our fundraising,” said Goh.

“This will allow us to continue with our small-to-mid-market fund selection focus. Our ability to generally write $30-60 million cheques, and up to $100 million cheques in exceptional instances, will enable Axiom to continue to be among the leading investors for such GP groups,” said Lam.

The new fund would look to invest in 20-25 fund managers across countries and strategies like buyout, venture capital, growth, etc. "We are seeking leaders in each category, be it India growth capital or China venture capital," said Goh.

On India Private Equity Market

According to Goh, India attracted a lot of attention during the market cycle in 2006-07. But a large amount of LP dollars would now flow to Greater China, given the larger market and track record. "If you look at the fundraising data, India and China raised similar PE dollars during that period even though the GDP of China was about three times of India. Today, China is getting more funds, which reflects its larger GDP," he added.

Also, for General Partners who closed their maiden funds in the last cycle and approached the market for their new funds, their track record would do the talking. The fundraising market for first-time fund managers remains pretty tough, notes Axiom Asia Partner Chris Loh.

"There are a lot of India GPs who are coming back for their second funds and a lot of them raised their first vehicle in 2006-2007. The stronger ones are now separated from the rest as LPs can look at performances of the first funds," said Loh. 

Secondary Opportunity

Axiom Asia is increasingly looking at secondary opportunity in India. The Singapore-based firm is looking at both "LP positions in funds we like and managed by GPs we know well. The other is secondary directs, where we purchase a portfolio of direct investments," said Alex Sao-Wei Lee, Partner and head of private equity secondaries at Axiom Asia. 

The firm recently completed a deal to buy a fund position in an undisclosed India-focused manager. Last year, it was part of a consortium which bought all of Bank of America Merrill Lynch’s non-real estate private equity portfolio in Asia. Along with three other Limited Partners, it backed Bank of America Merrill Lynch spinout NewQuest Capital Partners, which held investments in India.

"We continue to come across opportunities in India and deal flow has been consistent over the last 2-3 years," said Lee. Axiom is seeing more deal flow in secondary fund positions now. But it also sees spinouts on the horizon involving Indian portfolio firms, although they may not necessarily result from Eurozone crisis. 

"Most European banks have limited exposure to Asian private equity as compared to European private equity. But there will be more of these bank spinouts and possibly more involving assets in India as well," added Lee.

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