Hedge funds a threat to buyout firms

SINGAPORE: Buyout firms in Asia say they are facing increased competition from hedge funds seeking to boost returns to attract investors.

Assets in Asia managed by hedge funds grew 38 per cent to US$101 billion (US$1 = RM3.67) last year, according to Eurekahedge, a Singapore-based research company.

The region also attracted US$17.2 billion of buyout funds, almost three times the 2004 level, the Centre for Asia Private Equity Research said.

“There will be transactions where they compete but I think more often than not, they’ll be complementary,” said Chris Gradel, a managing partner at Pacific Alliance, which manages about US$700 million of Asian buyout investments. “Whether private equity funds like it or not, hedge funds will be more active,” particularly in Asia.”

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