Private equity fundraising in Asia has dropped to its lowest since the aftermath of the global financial crisis, as investors are wary to lend capital amid the coronavirus outbreak that has restricted travel and roiled markets and businesses.
A total of $9 billion was raised by 35 Asia-focused funds from January to March, the worst start to the year since 2010, according to data from Preqin, which publishes information on private equity and venture capital investment.
The slowdown comes as the COVID-19 disease caused by the coronavirus, which was first reported in China, has swept across the world, forcing governments to lock down cities and suspend business activities.
Fundraising may continue to take a hit as fund managers weather the impact of the pandemic on their portfolio companies while investors take a step back to assess their overall capital allocation.
"This is a challenge for everyone, even for the big guys. For emerging fund managers, it can be harder to raise funds," said Mingchen Xia, co-head of Asia investments at Hamilton Lane.
World stock markets have lost $15 trillion in value as countries have scrambled to contain the virus spread and stabilize economies.
Fund investors, typically sovereign funds, pension funds and family offices, usually travel to Asia in the spring for meetings with their existing fund managers and to see potential new funds. But with heavy restrictions on travel and ongoing market volatility, they are becoming more cautious where and how to deploy their capital.
Two industry conferences in the region scheduled for March and April have been postponed to later in the year.
Funds that are planning to come back or start fundraising may face delay, said Xia, as fund investors, otherwise known as limited partners (LP), cannot travel and do onsite due diligence. "Some LPs may not feel fully comfortable investing," Xia said.
