Asian buyout attracts hedge funds

Buyout firms are facing increasing competition from hedge funds in the lucrative Asian buyout markets.

Last year, research indicated that Asian assets managed by hedge funds reached over $100 billion in value, causing concern among some in the buyout trade that private equity investors are being muscled out.

However, the figures suggest a fight-back, with over $17 billion worth of buyout funds also attracted to the region in the last 12 months, triple the investment levels of 2004.

Chris Gradel, managing director of the buyout firm Pacific Alliance, insists that hedge funds shouldn't be seen as a threat to private equity funds.

"There will be transactions where they compete but I think more often than not, they'll be complementary," said Mr Gradel, whose company currently manages $700 million of Asian buyout investments.

"Whether private equity funds like it or not, hedge funds will be more active, particularly in Asia."

Hedge funds work to make quick profits for large investors by relying on the knowledge and expertise of the fund managers.

The diversity of the investments involved means that the large hedge funds invest in any market where a profit can be seen to be made, making the Asian buyout market the most recent target.

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