The Carlyle Group (CG) has delayed the closing of its latest pan-Asia buyout fund as investors shift their attention and capital to other Japan-focused funds, according to Bloomberg.
CG is seeking a delay in finalizing its sixth regional buyout fund, which was launched more than two years ago but has only raised $3 billion, below its original target of $8.5 billion. Such fundraising typically takes about 18 months.
The slower-than-expected fundraising comes amid growing caution among global investors who are concerned about overpaying for assets and uncertain exit prospects, resulting in a more comprehensive due diligence process.
And as international investors increasingly focus on Japan, Carlyle's $2.9 billion Japan fund, which closed in May and is about 70% larger than its predecessor, is shifting attention away from its pan-Asia fund. Since the start of the year, Carlyle has raised nearly $6 billion in Asia, including $950 million for its second growth fund.
Recent increases in geopolitical tensions, difficult exit terms, challenges around capital allocation and heavy losses from investments in the Chinese market have led investors to reduce allocations to pan-Asian funds in order to increase their focus on home markets.
However, a few investors remain optimistic about Asian markets due to positive performance from certain managers who have stable teams and invest in markets such as Japan, India and South Korea.
Investors in the new Asia fund are expected to benefit from access to investment opportunities in the Japanese market, including the proposed acquisition of KFC Holdings Japan for $610 million announced on July 10, 2024, Bloomberg reported.
Carlyle is aiming to cut its China investment by 50% in its sixth Asia fund, and further to 20% in the next fund cycle. The firm is also looking at expanding investment opportunities in Asian markets, as are other financial firms such as KKR and Bain Capital. KKR has considered entering Japan's private credit market to offer an alternative to bank lending.
Similarly, to strengthen its foothold in the Asian market, Mitsubishi UFJ Financial Group (MUFG) and its consolidated subsidiary Mitsubishi UFJ Bank are set to invest in Globe Fintech Innovations, Inc. Taking advantage of the growing market, MUFG has invested in several digital startups and technology companies in the Asia Pacific region since 2020.
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