Private capital in the Asia-Pacific region is poised to rebound from the 2023 crisis, with Preqin forecasting a compound annual growth rate (CAGR) of 9.5% between 2023 and 2029 to reach $2.6 trillion in assets under management (AUM).
Venture capital (VC) is expected to see the highest growth in the Asia-Pacific region, with an expected CAGR of 10.7% during the forecast period, although private equity will remain the fastest growing asset class. more important.
Venture capital in the region is expected to generate the highest returns at 16.3 percent, even surpassing North America’s 15.6 percent.
Preqin noted that the greatest potential lies in early-stage venture capital investments.
“Early stage investments are typically smaller investments with lower valuations, which limits absolute downside risk, and by exposing yourself to a greater number of smaller deals allows for greater portfolio diversification,” he declared.
“Emerging markets in APAC, such as India and Southeast Asia, offer diverse opportunities across different sectors with favorable demographics for economic growth, which is why they have gained popularity among investors in recent years. »
At the same time, private equity in the APAC region is expected to lag slightly behind other regions, returning 12.9% between the end of 2023 and 2029.
This, the report points out, reflects concerns about the Chinese market.
“With around half of assets under management in China-focused funds, our lower performance forecast incorporates our assumption that realization levels will be lower and exit times longer over the coming years, primarily on the Chinese market,” he said.
“This will be partially offset by improved exposure to other markets such as India and Japan.”
Additionally, Preqin data projects a rebound in real estate in APAC, with a return of 7.1% between 2023 and 2029, compared to 3.5% over the period 2020 to 2024.
Preqin noted that amid uncertainties in China’s real estate market, investors are increasingly turning to core, core plus and value-added strategies in markets like Japan, Australia and South Korea. South, in search of greater stability and better yield.
“In addition, global diversified funds that are not tied to an APAC-only mandate are also increasingly involved, helping to support deal flow and liquidity in the market,” the report said.
The report also identifies the Asia-Pacific region’s infrastructure as a relatively bright spot, projecting returns of 9.4 percent between 2023 and 2029. It notably highlights the region’s urgent infrastructure needs, ranging from basic projects like from road construction to advanced renewable energy improvements. energy and digital assets.
On the other hand, Preqin expects APAC private debt to return to 10.4 percent, down from recent highs but still above the 9.2 percent reached between 2017 and 2023 .
