APAC becomes the most active region for VC

Oksana Patron

15 June 2023

The Asia Pacific (APAC) region-focused private capital assets under management (AUM) have more than doubled since 2018, driven by private equity and venture capital (VC), and made the region the most active VC market globally.

The “Alternatives in APAC 2023 report” by Preqin has found that for the first time since the start of the pandemic in March 2020, APAC has overtaken North America as the most active region for venture capital.

Furter to that, Preqin’s fund search data showed that 46% of venture capital investors were targeting APAC by the end of Q1 2023, up from 32% in the same quarter last year.

As far as private debt was concerned, Preqin analysts expected APAC private debt fundraising and returns to outperform other regions, with larger funds coming to market – including those using the direct lending strategy – the growth in 2022 APAC private debt AUM has already exceeded projections.

According to data, APAC private debt AUM stood at $95 billion by the end of Q3 2022, up by 28% from the end of 2021.

APAC-focused real estate AUM also expanded from $183.4 billion in 2021 to $208.5 billion in 2022. From December 2021 to September 2022, dry powder grew at a higher rate of 20.0% compared with 10.5% for unrealized value.

At the same time, ongoing geopolitical tensions related to technology and an increasing focus on reshoring were expected to accelerate the expansion of production facilities across APAC in the high-tech value chain ranging from semiconductors to electric vehicles (EV).

VC deals related to semiconductors, integrated circuits, or electric and hybrid vehicle value chains in APAC reached $24 billion in 2022, nearly double that of 2018, and their share of deals have been increasing.

“Despite the macroeconomic headwinds that have swept the world, Preqin maintains a positive outlook on APAC, supported by the fundamental growth potential in several large, under-represented markets,” Angela Lai, Head of APAC and Valuations, Research Insights, at Preqin, said.

“APAC-focused investors currently show increased caution toward China, shifting interest to other markets, which may drive growth in the region pending an economic rebound in China.”