Experts agree the Asia Pacific region can expect continual growth in private equity, according to the Ernst & Young 2012 Private Equity Outlook report.
Asia’s fastest growing southeastern subregion in particular is tipped to increase investment and economic activity. Respondents cite Indonesia as the primary target market for this growth.
In total, 70 percent of survey respondents anticipate private equity activity expansion in the Asia Pacific region, albeit a slight one.
The outlook forecasts increasing global prominence for the region, with private equity firms starting to employ more external advisors as a part of value creation strategies.
The outlook advises private investors to focus on building personal relationships to source opportunities. This has been shown to be most effective in China where more than half of respondents cite this as the primary method for sourcing deals.
Challenges include global economic uncertainty; the primary challenge for the Australasian market is raising capital while respondents suggest China and South Korea will face the same problems.
For the overall Asia Pacific region 55 percent of respondents indicate the valuation gap between buyers and sellers will remain stable throughout 2012. Nearly half of respondents expect the value gap to decrease in India and the same number expect the gap to increase in southeast Asia.
Most respondents believe investors will find it hardest to buy in Japan and China, while half say North America and Greater China will be the main sources for institutional capital.
More than half expect new fund opportunities for the region over the next year and two-thirds expect local LPs to favour fund opportunities in regions and countries closest to them.