Shifting Asia-Pacific investment dynamics; PE share of terminated M&A deals up

S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Private equity's pivot away from China took a toll on Asia-Pacific investment totals in 2023.

Private equity and venture capital investment in Asia-Pacific, excluding Japan, fell 30% year over year in 2023 to $25.08 billion, its lowest annual total in at least five years, according to S&P Global Market Intelligence data.

China's slowing economy and geopolitical tensions between the country and the US both played prominent roles in declining private equity investment in the region.

The pullback is just one aspect of the shifting private equity investment dynamics in Asia-Pacific, which include investors' heightened interest in Japan and India.

Japan investment emerged as a recurring topic on the earnings calls of listed private equity firms in 2023, with KKR & Co. Inc. CFO Robert Lewin describing carve-outs of Japanese businesses as a "key investment theme" for the firm as it reported third-quarter results. Around the same time, The Carlyle Group Inc. CEO Harvey Schwartz named Japanese buyouts as one of a handful of the firm's investment strategies gaining momentum during a period of muted deal activity.

India, too, appears poised for a breakout year in 2024. Dechert LLP, in its 2024 private equity outlook report, noted India's economic growth was outpacing that of both China and Japan, adding that fund managers are actively expanding their portfolios in the country.

Read more about private equity investment in Asia-Pacific, excluding Japan, in 2023.

CHART OF THE WEEK: PE's share of terminated deals grew in Q4 2023

⮞ Deals backed by private equity or venture capital firms accounted for 17.2% of terminated M&A transactions in the 2023 fourth quarter, their highest share in any quarter since at least the first half of 2020, according to Market Intelligence data.

⮞ Private equity's share of terminated deals rose in the fourth quarter, as overall terminated deals fell to 29 deals with an announced value of $15.96 billion, the lowest quarterly total since at least the first quarter of 2020.

⮞ During all of 2023, seven private equity deals worth at least $1 billion each were canceled.

TOP DEALS AND FUNDRAISING

– Arcline Investment Management LP agreed to buy aerospace and defense company Kaman Corp. for about $1.8 billion in an all-cash transaction.

– HgCapital LLP is selling its entire minority shareholding in energy and commodity intelligence provider Argus Media to General Atlantic Service Co. LP and Argus.

– TPG Inc. made a significant strategic investment in ambulatory surgery center company Compass Surgical Partners LLC.

– Blackstone Inc. made a strategic minority growth investment in engineering and technical services firm Salas O'Brien Engineers Inc.

– Wynnchurch Capital LP secured $3.5 billion in committed capital at the close of its sixth private equity fund. The Wynnchurch Capital Partners VI LP fund was oversubscribed, surpassing its $3 billion target.

– Toronto-based ArcTern Ventures raised C$335 million in commitments for its Fund III. The vehicle was oversubscribed, exceeding its C$300 million target.

MIDDLE-MARKET HIGHLIGHTS

– Equistone Partners Europe Ltd. is selling its stake in premium contract and hospitality services provider CH & Co Catering Ltd. to Compass Group UK & Ireland Ltd. in a deal valuing the target at £475 million, pending regulatory approval.

– AFM Capital Partners Inc. acquired machining manufacturer Pro Products Inc.

– A fund managed by Falfurrias Capital Partners LP made a significant growth investment in IT procurement solutions provider NPI LLC.

FOCUS ON: MACHINERY

– Fort Point Capital LLC added ice and water vending machine maker Ice House America LLC to its portfolio, acquiring it from Ulysses Management LLC.

– An Angeles Equity Partners LLC affiliate purchased industrial robotics maker and integrator Acieta LLC in a deal with seller Mitsui & Co. (USA) Inc.

– Wise Equity SGR SpA's Wisequity VI fund agreed to buy a majority stake in Italian rebar processing machinery company MEP SpA.

For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.