Investment Market Trends: Sectors

PanAsianBiz ^ | July 6, 2006 | Dr. Bill Belew

[G. Stolyarov II]

I attended a recent Investment in China and India Summit hosted by Financial Research Associates. I will use this forum to share some of insights that were given at this summit for the benefit of those hoping/thinking/planning on investing in an Asian country -- China, India, or Japan.

Growth Capital- Dominant type of fund in Asia by number, especially in country-focused funds; focused on backing firms that are already established but are looking for capital to support strong growth.

Buyouts- True control buyouts are a more recent phenomenon in Asia. Most funds focused on buyouts are larger Pan-Asian funds or are targeting Japan or Australia. Most Pan-Asian funds are subsidiaries or sister funds of established US or European private equity firms.

Venture Capital- Very few locally based early-stage-only funds, as the market is more focused on later-stage deals.

A number of US-based Venture Capital firms are founding Asian joint ventures or subsidiaries.

Source: Probitas

[G. Stolyarov II]

Interesting; it seems that the Asian economies feature a lot of strong established companies with ample funds available for growth, but the prospects of new start-up businesses are slimmer, as few venture capital funds are available to support them. This seems to differ greatly from the situation in the United States, where numerous new businesses are started regularly, with capital available in the form of bank loans or corporate investments. Perhaps the Asian economies need to advance more before this frequency of new business formation becomes sustainable. See Dr. Belew's blog at PanAsianBiz