07/07/2010

Baring Gearing Up to Pitch Big Asia Pool

Baring Private Equity Asia is marketing its next fund.

The Hong Kong growth-equity shop told attendees at its annual meeting in Shanghai three weeks ago that it was almost ready to begin formal pitches, and it now looks like that phase of the effort is imminent. The firm hasn't set an official equity target yet for the vehicle, Baring Asia Private Equity Fund 5, but investors are expecting a goal of $1.75 billion.

One limited partner said Baring should be most of the way there by yearend. UBS is serving as placement agent, as it did for the outfit's two previous offerings.

Those funds are performing well. For example, Fund 3 was running a rate of return of 68% as of midyear 2009, which ranked fourth among 510 Asia-focused funds tracked by Preqin. That vehicle held its final close with $490 million in 2005. Fund 4 came in 2008 with $1.5 billion. It was 74% invested at the beginning of this year.

Baring invests in a range of mid-size companies across Asia, with a focus on paying discounted prices for businesses in China and India with the potential for earnings growth. It sometimes goes after distressed companies in need of restructuring. "They actually do pick good investments, they have good purchase-price multiples in their deals . . . and they have a very good team on the ground," one source said. "It's not just one home run here. There are a number of good deals in their funds."

Baring is headed by chief executive Jean Eric Salata, who founded the operation in 1997 as an arm of London-based Baring Private Equity Partners. He then led a management buyout in 2004. The firm's backers include Pennsylvania School Employees, whose $300 million commitment to Fund 4 made it the vehicle's biggest investor.