Global investors are continuing to look further afield for compelling investment opportunities and Asia- Pacific (APAC) continues to offer a range of opportunities that offer diversification away from home markets.
Cameron Joyce, SVP, Deputy Head of Research Insights, at Preqin, says:“The APAC region continues to present a compelling long-term investment opportunity for asset allocators who are seeking diversified sources of return. However, the market continues to present its own set of unique challenges. We forecast strong growth for the region, especially in PEVC but nearer-term headwinds may pose downside risks to our view. The venture capital industry looks particularly susceptible to current economic conditions, which currently plays an outsized role in the private capital markets in the region.”
The region has so far avoided many of the more severe inflationary impacts seen in the US and Europe, given the more measured policies from the authorities in response to the pandemic.
While on-going COVID restrictions have remained in place in some markets, investment activity has continued to hold up relatively well.
Private capital funds in APAC continued to deliver attractive risk-adjusted returns. For fund vintages between 2012 and 2019, APAC private capital funds returned a median of 18.2% net internal rate of return (IRR) which is higher than Europe (15.9%) and North America (17.4%). However, the standard deviation of returns in APAC is also higher at 26.6% compared to 15.7% in Europe and 19.2% in North America. This is in part a reflection of the key role the PEVC plays in the overall asset mix of the region. PEVC returns have
