First, let’s look at the private equity fundraising landscape in Asia. A number of well-known private equity firms raised successor funds, including CVC Capital Partners, The Carlyle Group, TPG Capital and Affinity Equity Partners. The success of these well-known sponsors follows the immense $6 billion Asian Fund II raised by Kolhberg, Kravis Roberts & Co. L.P. in July 2013, and can be seen as a sign of renewed investor confidence in the asset class and the region. Almost all of these sponsors were able to raise larger funds, with the noticeable exception of CVC Capital Partners, which raised a fourth Asian fund that was approximately $620 million smaller than its third fund.

Baring Private Equity Asia would have counted among the largest private equity funds raised in 2014 with $3,850 million (and have earned a spot in the table), but it has delayed its final close to early 2015 in order to accommodate some limited partners.

I would expect, based on the fact that many of the top private equity fund managers in Asia, including Navis Capital, Quadrant Private Equity (which closed its seventh fund after just one month of fundraising), SSG Capital, and Crescent Capital Partners, have recently raised successor funds to the funds they raised around 2007 to 2011, that private equity fundraising in Asia will be somewhat more subdued going into 2015. Limited partners seeking to invest in Asian private equity are likely to continue to remain focused on “track records” and “quality”. I would also expect to see more emphasis on investing directly in funds raised by top decile private equity sponsors rather than relying on private equity fund-of-funds to gain access to such funds.1

Second, let’s turn to the venture capital fundraising landscape in Asia. In the venture capital space in Southeast Asia, a number of developments have occurred. Some private equity sponsors have become active in the venture capital space, such as the Northstar Group, which partnered with Shane Chesson and Hian Goh (formerly of Pivotal Ventures Asia) to establish a venture capital investment arm.2 This marks one major ASEAN-based private equity firm that is diversifying into earlier stage investments, similar to the trend we have already seen in some technology focused hedge funds. Melissa Guzy and Wei Hopeman of Arbor Ventures held a first close on a $125 million early-stage fund focused on the financial industry, which also bears the distinction of being one of the few venture capital firms in Asia led by women. CyberAgent Ventures, a Japanese venture capital firm focused on internet services startups, raised a $50 million Asia-focused fund, its second fund. Softbank raised a $20 million fund with a local partner to invest in the Philippines, in addition to the $50 million fund it partnered with Indosat to launch in Indonesia. GREE Ventures, the venture arm of a Japanese mobile gaming company, also raised a $50 million fund for internet and mobile sector Series A investments in Southeast Asia and Japan. Monk’s Hill Ventures raised $80 million early-stage venture capital and growth capital private equity fund.

China, too, has seen significant venture capital interest. The established Chinese venture capital firms raised new venture capital funds, including Qiming Venture Partners, DCM Ventures, Legend Capital, and IDG Capital Partners. Most of these successful sponsors raised more than their targeted capital commitments.

Some new Chinese venture capital firms were also able to tap positive market sentiments to raise new funds, notably Banyan Capital with a $206 million first fund closed at the beginning of 2014 and, unusually, with a second fund in fundraising at the moment. Vision Knight Capital, a relatively new entrant into the Chinese venture capital space, also closed its second fund in 2014, with $550 million in capital commitments.

And Capital Today, taking its cue from some other venture capital and growth capital private equity sponsors’ experiments in “evergreen” fund structures in the United States,3 floated the idea of a $400 million evergreen venture capital fund.

All of this suggests that 2015 will likely see an increased interest in venture capital investments in Southeast Asia and China. There is increased “dry powder” and sponsors will be under pressure to deploy this capital. It may also lead to competition among venture capitalists that drives up valuations for startups, particularly in “hot” sectors. One key trend that I think bears watching is the increased interest in Southeast Asia from Japanese venture capitalists. I don’t quite know what to make of it yet, particularly in terms of trying to assess how effective these venture capitalists will be in assessing a culture and market very different from Japan, but I’m willing to give them the benefit of the doubt, particularly as many of them are bringing local partners with deep regional expertise to lead their Southeast Asian teams. I’m reserving judgment on evergreen fund structures. There is quite a fair bit of inertia in the private equity and venture capital industry, and deviations from “standard” fund structures tend to be viewed with a degree of suspicion. That being said, I certainly believe that if there is a sponsor in China that could pull it off, Capital Today would be one of them.

Now, third but not least, exits. It isn’t enough to raise funds and invest them, you also need to exit and return capital to your limited partners. 2014 was a year of approximately $57 billion in exits, according to the AVCJ, beating the $43 billion in exits in 2013. The giant in the room in terms of Chinese venture capital exits was the initial public offering of Alibaba Group on the New York Stock Exchange for $25 billion. Capital Today may have reaped a 100x windfall from its early-stage investment in JD.com, which may take the prize for one of the most significant home runs in Chinese venture capital in 2014. On the private equity side, KKR and Affinity Equity Partner sold Oriental Brewery to Anheuser-Busch InBev for $5.8 billion, while Bain Capital took Skylark (a Japanese restaurant chain) public for $610 million.

At the end of 2013, China lifted its government imposed embargo on public offerings on the Chinese stock exhanges, which has also contributed to an increase in Chinese portfolio companies able to tap public markets for exits. This, however, should not be seen as an opening of a “floodgate” that will allow the numerous Chinese portfolio companies to seek listings. The China Securities Regulatory Commission has so far indicated that it intends to “pace” public listings to avoid too many companies going public in any given time period.

I would expect, on the whole, that barring unexpected developments in the public markets, there will be significant exits in 2015 as firms try to return capital to investors from funds they raised in 2008 – 2009 or earlier, though perhaps nothing quite a dramatic as Alibaba or JD.com. It would also not surprise me to see a continued trend of private equity firms selling to other private equity firms (a trend I noted in 2012 and which I saw continue in 2013 while working at my old firm). In some cases, sponsors may come under significant pressure to exit ahead of the end of their fund lives, particularly for funds that have already exhausted the usual fund extension provisions found in their constituent documents.

So what’s likely to happen in 2015? I prefer not to make predictions. Like Ezra Solomon, I find financial market predictions to be a good way to make “astrology look respectable”. That being said, I have made a few observations scattered throughout this retrospective, in the nature of general considerations, which may serve to illuminate the directions I think Asian private equity may take in 2015.