MARKETS & INVESTING | Staff Reporter, Singapore

Asia's deal volume soars 96% to $110b in 2017

Thanks to maturing private equity markets in China, Korea, and Japan.

Asia's deal volume dramatically soared by 96% to $110b, McKinsey & Company revealed.

According to its Private Markets Annual Review 2018, the region raised a whopping US$78b from private equity (PE) during 2017.

"This dramatic growth is not surprising for the region’s maturing PE industry and reflects several larger deals in China, Korea, and Japan, many involving business-to-business (B2B) companies," the report said.

2017 was a record-breaking fundraising year around the world with US$750b raised, up 3.9%.

The firm said the global rise was driven by mega funds, which also emerge for the first time as a significant feature in Asia.

The report revealed that Asia megafunds are skewing to PE buyout, rather than other asset classes.

Mega funds – previously close to non-existent in this region – contributed over $20b of the $60b private equity fund raised in Asia over 2017.

Asian mega funds also made a large contribution to the global total of US$174b.

"Previously, private equity investing in Asia has been primarily a growth fund market where firms take only a minority stake in businesses," McKinsey said.

However, the firm observed that the lack of control this entails has become more problematic lately as firms are unable to effect the changes necessary to improve performance and value. This is particularly the case in China, India and South East Asia. 

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