Billions for Asian Funds Available

Billions for Asian Funds Available

Up to $70 Billion Available for Hedge Funds Looking to Asia, Survey Says

As much as US$70 billion is up for grabs for global hedge funds looking to raise money in Asia over the next few years, according to a Barclays BARC.LN -0.26% survey.

Vast private wealth in the region and the rise of several large sovereign-wealth funds has long been an opportunity for global hedge fund managers. Asian investors, though, continue to account for a small portion of industry assets and have proven notoriously hard to win over.

Investors in the region currently account for around US$150 billion invested in global hedge funds, Barclays said, a sliver of the roughly US$2.5 trillion managed by the industry. Of the up to US$70 billion the bank estimates will be on the table over the next few years, roughly half would be new assets.

“There’s this perpetual sense of enthusiasm that tends to originate primarily from North American-based managers that a pot of gold exists in Asia that has yet to be accessed,”  said David Bennett, Barclay’s head of capital solutions in Asia. “There is definitely a lot of potential here in terms of raising assets—realizing that potential is a very different matter.”

To change that, Barclays said managers should be on the watch for Japanese corporate pensions looking to increase their allocations to alternative investments,  as well as Korean institutional investors that could in the coming years make their first foray into hedge fund investing.

Potential regulatory changes allowing Chinese insurers to invest in offshore managers should also be on the radar, Barclays said.

Kenneth Griffin’s Citadel LLC in May became the first foreign hedge fund to complete a trial program that allowed six foreign funds to raise US$50 million from mainland investors. The program only allowed funds to raise money from wealthy Chinese individuals rather than Chinese institutional investors, such as insurers.