Alt Investments
Asia's Alternative Investments AuM To Log "Explosive" Growth - Preqin
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Private capital is playing an increasing role in asset allocations across Asia-Pacific, as demand to access this fast-growing and diverse region remains robust, the report said.
The alternative investment market in Asia will reach $6 trillion
in assets by 2025, according to the research firm, Preqin, while capital available
to be deployed (excluding hedge funds) sits at $446 billion, a
record.
Areas such as private equity, private debt, real estate and
infrastructure have expanded rapidly because investors are
willing to shoulder the superior yields in return for the
relatively low liquidity at a time of ultra-low interest
rates.
“Asia-Pacific has been an engine driving global growth for more
than a decade now and is in the middle of an historic
transformation. Investor demand to access this fast-growing and
diverse region remains robust, while structural challenges to
deploy capital are easing. The dawn of the Asian Age – or rather
the re-emergence of the region’s economic dominance on the world
stage – has been widely anticipated,” Mark O’Hare, founder and
CEO at Preqin, said.
Preqin said the amount of un-deployed capital – also known as
“dry powder” – has risen from $416 billion in December 2020. Some
77 per cent of this capital is held by private equity and venture
capital fund managers in Asia, followed by real estate (10 per
cent).
Growth in private capital between now and 2025 will be
“explosive” in Asia, Preqin said, rising from $1.71 trillion in
September 2020.
One big driver of such growth is venture capital, with AuM of
$574 billion held by fund managers in the region, as of September
2020. Almost 36 per cent of total Asia Pacific-based private
capital assets under management are held by venture capital funds
- the most prominent strategy in the region.
Hedge funds have faced more difficulties, however. New fund
launches in the region fell by more than 20 per cent in 2020 from
117 on the back of the COVID-19 pandemic.