The move caters to rising demand from rich investors for private assets that offer a measure of liquidity
[SINGAPORE] UOB, South-east Asia’s third-biggest bank by total assets, said it is the world’s first to distribute an Asia-focused private equity (PE) evergreen fund to its private banking clients.
Launched by Hamilton Lane, the Asia Private Assets Fund invests in private companies in the region. Forty per cent of the fund will be invested in developed markets such as Japan, South Korea, Singapore and Australia. Another 40 per cent will be in emerging Asian countries, with the rest in global markets.
UOB Private Bank, which caters to clients with investable assets of S$5 million, will be the fund’s sole distributor from today (Sep 11) for a few months.
Investors want to access private Asian companies, given that “86 per cent of (the) businesses in Asia are privately held, and there is already a very sizeable Asian PE market with about US$3 trillion” in assets under management, said Wong Meng Keet, head of managed products and alternative investments at UOB Private Bank.
However, the traditional closed-ended PE fund structure with a lock-up period for as long as 12 years makes investing in private companies relatively unappealing to retail investors, who usually prefer more liquidity to address their cash-flow needs.
Enter evergreen funds, which are more palatable to these investors because the minimum investment is typically lower than that of closed-end funds that target mostly institutional investors. For the Asia Private Assets Fund, this amount is S$100,000.
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They are also more appealing to retail investors as they operate indefinitely, allowing continual capital raising, investment and distribution. Investors can enter and exit at periodic intervals. This is why such funds are known as semi-liquid funds as well.
“Proliferation” of evergreen funds
As PE funds target high-net-worth individuals, there has been a “proliferation” of evergreen funds globally, with more than 400 launched in the last few years, bringing the total to 509 as at January 2025, said Wong.
“The evergreen structure has been a game changer for targeting the (private) wealth space, because it dramatically reduces the administrative burden (found) in a traditional lock-up structure.”
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UOB Private Bank’s clients’ current allocation to evergreen funds is around one-third, with the rest in the closed-ended structure. That has crept up from the low-teens percentage allocation from three years ago, Wong added.
Apart from a long lock-up period, investors need to grapple with J-curve and capital calls with closed-ended funds. J-curve refers to the initial period when the returns on an investment fall, before rising further out. This happens as fund managers do not deploy all the funds at once.
UOB Private Bank currently offers evergreen funds in other private assets, such as private credit, infrastructure and real estate.
As the bank’s clients are already actively investing in private assets through their family offices, they are “very receptive” to the idea of accessing Asian PE through an evergreen structure, Wong said. Therefore, he is confident that the fundraising will be strong.
This is especially since Hamilton Lane itself, and through its senior managers, has invested in the fund. In addition, there is an institutional investor who is putting in a sizeable amount, he said.
With rising appetite for private assets globally, the traditional portfolio construction of 60 per cent stocks and 40 per cent bonds is evolving into 60 per cent public equities and debt, and 40 per cent in their unlisted peers, he added.
