Private capital fundraising in the Asia-Pacific region continued to languish in 2024, marking new lows against a backdrop of yet another challenging year, according to Preqin’s quarterly update.
Venture capital, which has historically outpaced other alternative asset classes in the region, took the worst hit of all. APAC-focused VC fundraising concluded the year at its lowest point in a decade, in line with continued weakness in investor sentiment globally, per Preqin data.
Other asset classes such as private equity, private debt, and real estate also marked new lows since at least 2019. The region’s private capital markets have continued to underperform against its European and North American counterparts in the post-pandemic period, the report added.
Investors also realised the importance of geographical diversification amid market volatility, as funds in the region accounted for more than 40% of the total capital raised last year, the highest share since 2019.
APAC-focused private equity funds raised a total of $47 billion in 2024, an almost 18% decline year-on-year. But while the rest of the region endured an incessantly challenging fundraising environment, Japan shined as a bright spot.
The North Asian market became a favourite among investors who remain active in the region, as a shift in capital from China piles up more dry powder waiting to be invested, coupled with solid investment opportunities, low interest rates, and a persistently weak yen.
Of the total private equity funds raised in 2024, Japan-focused funds made up 15.8%, more than doubling their historical five-year average share of 6.4%.
Despite the ongoing challenges for fundraising, private equity deal activity in APAC remained relatively robust. A total of 877 deals for the year surpassed the dealmaking volumes in 2019, 2020, and 2023, driven largely by the growth in activity in Japan.
The country’s share of deal activity accounted for roughly 30% of the total deals last year, exceeding its historical five-year average of 21.9%.
Japan also continued to lead the region in exit volume for the second consecutive quarter in the fourth quarter of 2024, accounting for nearly 40% of total exits, with the majority being trade sales.
Meanwhile, initial public offerings (IPO) activity across APAC showed steady growth quarter-on-quarter, with the fourth quarter of 2024 seeing 41 IPOs, approximately 80% of which took place in Greater China.
Last year recorded 135 IPOs with an exit value of around $19.6 billion, making it the strongest year out of the last five. The numbers indicate some positivity, signalling that the private equity exit market has stabilised and that fund managers are becoming confident to explore exit options beyond secondaries and trade sales, which have dominated the market over the past two years.