Hedge Funds, Private Equity Look East

February 23, 2001 (PLANSPONSOR.com)- Spurred on by opportunistic buying, bottom fishing and more expensive alternatives, Asian hedge funds and private equity funds grew to about $82 billion in 2000, an increase of $31 billion from just three years earlier.

The new money moving into both sectors is primarily European, according to the Hong Kong’s Asia Venture Capital Journal and AsiaHedge Magazine. The destination is often Japan.

One reason for the growth is that European hedge fund investors account for a large portion of  hedge fund investors and are often already familiar with Asian investing.

However, there are still structural impediments for hedge funds operating in Asia. Most importantly, in most markets outside Japan, for example, it’s difficult or illegal to take short positions in stocks.

Private Equity Growing

In the private equity area, investors are looking to learn from Asian companies, as they go through key stages in order to go public, rather than just gain a positive return.

Among US investors, public funds are increasing their Asian private equity exposure.
The California Public Employees’ Retirement System (CalPERS), the largest US pension fund, made a $400 million commitment to Asian private equity through two funds.

Also, the University of North Carolina at Chapel Hill’s $1.1 billion endowment increased its private equity overseas to about 10% of total assets.  Just three years ago, the fund had 1% of its assets invested in private equity.

– Chuck Epstein      editors@plansponsor.com