Baring Private Equity Asia said on Tuesday that it had raised a nearly $1.52 billion fund to invest in companies in the alternative energy, media, financial services, consumer and industrial sectors in the region.
About 30 percent of the fund has been invested already, Chief Executive Jean Eric Salata told reporters, noting that deal flow was strong as mid-market companies in Asia lack alternatives for funding amid volatile financial markets.
"The IPO markets, as most of you know, are essentially closed right now except for a very limited number of companies ... and the banks have tightened credit both in China and in India," Salata said.
"There's probably more demand than we anticipated. We feel the timing is actually quite good for this fund as far as the ability to invest."
The Baring Asia Private Equity Fund IV is the largest regional growth equity fund ever raised for Asia, the company said, and will target companies with enterprise values between $100 million and $500 million and operations in China, India, Japan, Singapore, Hong Kong, Taiwan and Southeast Asia.
Salata said the new fund, which will be mostly unleveraged, will target returns of 30 percent a year.
By comparison, the firm's previous fund, Baring Asia Private Equity Fund III, which closed in August 2006 and raised $490 million, had generated an annual rate of return of 100 percent or more, Salata told Reuters in March.
"What Asia has going for it is that underlying growth in businesses here is higher, and that should drive higher returns," Salata said.
Baring Asia said it has about $2.5 billion in assets under advisory.