Research

The rapid and continuing growth of private equity in the Asia Pacific region has heightened interest in private equity fund terms among investors (“limited partners” or “LPs”) comparing potential funds for investment, and fund managers (“general partners” or “GPs”) seeking to benchmark their terms against the market norm. Increasingly, private equity participants are examining how fund terms in Asia compare with best practice principles issued by the Institutional Limited Partners Association (“ILPA”), and seeking to understand why there may be differences in fund terms relative to other markets globally as well as where discrepancies may be acceptable industry differentiation.

In response, Squadron Capital and the Emerging Markets Private Equity Association (“EMPEA”) joined forces to produce this “Asia Pacific Private Equity Fund Terms Survey,” providing market data and analysis on the key terms and conditions that prevail in the Asia Pacific region, with year-on-year comparisons to track changing dynamics and benchmarks against global norms, where available. The first survey in this annual series, covering data on funds raised in 2009, is available on request from Squadron Capital.

Based on input from 94 Asia Pacific GPs that achieved a final closing during 2010 or who were actively fundraising as of 31 December 2010, this unique Survey provides a snapshot of some of the current hot topics in private equity within the Asia Pacific region, including the level of management fees and management fee offsets, key person clauses and no-fault divorce provisions. We also examine a topic of specific relevance to many markets within the Asia Pacifi c region – the fl exibility or lack thereof for funds to invest in PIPEs – as well as a topic of specific relevance to Chinafocused managers, i.e. the allocation of investment opportunities between parallel US Dollar and RMB funds.