By Kane Wu
HONG KONG (Reuters) -Bain Capital has completed the final close of its fifth pan-Asia private equity fund at $7.1 billion, exceeding its target by 40%, the U.S. investment firm told Reuters, amid a challenging macroeconomic and geopolitical environment that has otherwise impeded fundraising worldwide.
Bain Capital said the firm itself committed $750 million to Bain Capital Asia Fund V, alongside existing and new investors.
At $7.1 billion, the fund is Bain Capital's biggest to date for Asia and also the region's largest private equity fund raised this year, according to Preqin data.
Bain Capital's fundraising close comes as global investors confront geopolitical uncertainties, a higher interest environment, market volatility and macroeconomic headwinds in many markets.
"If you've got the right track record, a consistent commitment across the region, and the right platform, there is demand, because a lot of investors are under penetrated in Asia," David Gross, Bain Capital's Asia managing partner, said late on Monday.
Asia-focused fundraising totalled $73 billion so far this year, nearly half of 2022's annual amount and less than a third of the $299 billion raised in 2021, Preqin data shows.
Bain Capital, which started fundraising in the second half of 2022, had an initial target of $5 billion.
Japan is an area of focus for the latest fund, Gross said.
Bain Capital has led 26 investments in Japanese businesses totalling more than $6.7 billion, including marquee deals such as the $18 billion buyout of Toshiba (OTC:TOSYY) Corp's memory chip business.
The investment firm is also still active in China, he said, where investors have been cautious about deploying capital due to an economic slowdown, regulatory crackdown and Sino-U.S. tensions.
Apart from geopolitical tensions, China's economic growth has been slower than expected with some real structural issues, Gross said. However, there are areas he sees tremendous growth in such as data centres and renewable energy and segments that are more insulated from geopolitical and political factors.
"We think there are compelling opportunities to invest (in China), as long as you're thoughtful about sector exposure, you're thoughtful about the thesis, and how you navigate around an increasing set of challenges," Gross said.
No China-focused buyout fund denominated in U.S. dollars has been raised this year, Preqin data showed.
Bain Capital invests across multiple asset classes, including credit, public equity, venture capital and real estate, managing approximately $180 billion in total assets globally.
Gross said he sees investment opportunities in service businesses for healthcare, information and entertainment sectors, software companies and consumer sectors especially in Japan and India.
Business succession trends across Asia, restructuring of large regional corporates and multinational companies exiting China and other Asian markets are also deal drivers in the near term, he said.
Bain Capital in August won a bid to take private data centre provider Chindata Group, which it already controls, in a $3.16 billion deal.
In the same month, it struck a deal to acquire Australian aged care operator Estia Health A$838 million ($551.3 million).
Bain in June sold 50% of its Japanese human-resources software provider Works Human Intelligence to Singaporean sovereign wealth fund GIC for an undisclosed amount.
The firm closed its previous Asia private equity fund at $4.65 billion in December 2018.