Taiwan-based secondary investor AB Value Capital Partners plans to launch its eighth fund in 2Q26 with a target of USD 250m – a two-thirds increase on the prior vintage. The step-up reflects expectations of continued growth in deal flow across Asia and greater diversification in strategies and geographies.

“Over the past five years, demand for secondaries in Asia has increased significantly, and we think more pipelines will come to the market in the next five years in Japan and other parts of Asia. India is one example where we have not yet invested much,” Shunsa Hayashi, the firm’s founder and managing partner, said.

“We want to be more diversified, and USD 250m is the size that we think is necessary.”

Even as global secondaries volume reached a record high of USD 226bn last year, Asia remains a tiny part of the market. The Asia share, based on deals involving funds focused on the region or companies based in it, was just 2%, according to Evercore. In 2024, it was 3%. Nevertheless, this represents fertile territory for AB Value as one of few Asia-dedicated mid-cap players.

The firm traces its history to 2003, when Hayashi led the direct secondaries team at Japan’s Nikko Ant Factory, now Ant Capital Partners. In 2006, the team relocated to Taiwan, where it operated as a subsidiary of Ant. Following a management buyout led by Hayashi and co-founder and fellow managing partner Dennis Chun in 2016, it rebranded as AB Value.

The initial focus on direct secondaries has evolved into a more diversified approach. Fund VIII will cap directs at 30% of the corpus, and investment activity will remain largely in Taiwan, where the strategy is to return capital on minority stakes in profitable companies faster than a typical fund takes to fully deploy.

Accelerated liquidity is also a priority in GP-led transactions. Influence over outcomes is typically secured either by leading deals or securing seats on investment committees or LP advisory committees (LPACs). The approach was demonstrated as recently as last year, when AB Value co-led an investment in a two-asset continuation vehicle (CV) raised by CDIB Capital Group.

GP-led transactions accounted for 25% of Fund VI; in Fund VIII, it will be 30%-50%. There is a preference for multiple-asset CVs to mitigate concentration risk.

LP-leds, which will account for 30%-40% of the new fund, are approached with deliberate selectivity to avoid competition with larger players. For example, much of the strategy involves targeting regional banks in Japan that launched PE programmes years ago and are now seeking liquidity.

Geographically, the mandate otherwise includes Taiwan-connected opportunities in Greater China and emerging managers in Southeast Asia. India and Australia are targeted on an opportunistic basis and with discipline on valuations.

Competition is also mitigated by focusing on the lower middle-market, where deal sizes are typically around USD 100m and often overlooked by mainstream global secondaries players. This does not preclude broader plans to access larger deals by leveraging co-investment.

AB Value also sees its quick payback playbook as a point of differentiation. The firm claims to return 100% of capital by year six. This compares to a global average of nine years and 12 years in Asia. The aim is to recover 80% of costs within three years. For direct secondaries, the average holding period is 3.6 years. Sales to strategics and financial sponsors represent at least four out of every five exits.

“We try to differentiate ourselves with a seven-year fund and four-year investment period, and also five-year and six-year [timeframes] to hit the 100% capital return,” Hayashi said. “Our monetisation process will be shorter compared to the normal secondary fund.”

Scaling up

The secondary team at Ant Capital was established as a liquidity solution at a time when Japan’s venture capital industry was in difficulty. Three yen-denominated funds were raised, tapping domestic LPs through Ant’s network.

Following the establishment of the Taiwan subsidiary, Fund IV, branded as Primasia Ant Bridge No.1, raised USD 77m in 2007 for a directs-focused strategy. It was touted as Taiwan’s first dedicated secondary fund.

In the wake of the global financial crisis, investment largely involved acquiring positions from distressed Taiwanese corporations at 40%-50% discounts, with net asset value (NAV) referring to book value. Activity focused mainly on traditional sectors such as industrials, transportation, and consumer.

Fund V closed in 2014 on USD 67m, shifting allocations to approximately 50% directs and 50% LP-leds. By this time, the team had begun targeting significant minority positions and saw increasing opportunities in IT and semiconductors. However, these segments were difficult to address due to ongoing ties to Ant Capital, which was highly regulated by its financial institution shareholders.

After the MBO, the first independently raised fund – AB Value Bridge VI – closed in 2017 on USD 100m. McKinsey Investment Office, now Neuberger Berman, put in USD 45m as anchor LP. It played the same role in Fund VII. Other investors included Japanese endowment and pension funds, Taiwanese high net worth individuals, and family offices from Singapore and Taiwan.

Fund VI marked the entry into GP-led transactions. AB Value claims primary responsibility for Taiwan’s first GP-led transaction in 2018 – a multi-asset deal comprising venture capital positions. The transaction delivered an 80% IRR and a total value to paid-in (TVPI) of 1.8-1.9x, while the capital was returned within three years.

In 2020, the firm participated in a USD 100m renminbi-to-dollar restructuring led by TR Capital and involving seven assets managed by Chinese technology investor Kinzon Capital. The investors had their pick of 19 companies across various Kinzon funds.

“We’ve started targeting more GP-led allocations simply because, with direct secondaries, we usually aim for higher multiples – around 2x to 2.5x – but the final exit can take nearly four years,” Agnes Tang, a managing partner of AB Value, said.

“That means we need LP-led transactions to generate earlier distributions for our LPs. However, that space is highly competitive. While the IRR tends to be decent, the multiple is often less attractive.”

Fund VII launched in 2021 and closed in 2023 on USD 150m, including US and Taiwan dollar-dominated traches. This fell short of the USD 350m target, with AB Value citing generally challenging fundraising conditions.

Taiwan-based insurance companies joined as new investors, accounting for 20%-25% of the corpus. Pension funds from the US and Japan comprise 30%-40%, while Asian family offices make up another 20%-30%. The GP commitment is over 10%.

Being diversified

While Fund IV focused on Taiwan, Japan, and to a lesser extent, Greater China, Funds V and VI saw increasing exposure to Japan. Fund VII forayed into Southeast Asia.

These markets are covered by a staff of 13, including nine investment professionals across Taipei, Tokyo, and Singapore. A Singapore office was set up in 2020 to cover Southeast Asia.

The debut deal in Southeast Asia came in 2021 with participation in a USD 450m CV comprising five sustainability-related companies from Navis Capital Partners’ sixth fund. TPG NewQuest led the deal – which priced at a 31% discount to NAV – with AB Value committing USD 11.3m via Fund VII.

There was a significant windfall within eight months of the CV closing when Singapore-based TES-Envirocorp was exited to a South Korean strategic investor for an enterprise value of USD 1bn. AB Value was able to return nearly 150% of its investment cost.

The geographic allocation for Fund VII stands at 30% Taiwan, 30% mainland China, 20% Southeast Asia, and 20% across the rest of Asia. There are plans to reduce China exposure to below 20% by the end of the deployment period.

AB Value expects to see increased deal flow from China in 2026, at least in terms of potential investments, as discount rates locally have climbed to 40%-50%. This compares to 10%-15% in the US and 15-20% in Europe. The caveat is that, while buyer interest has grown, hit rates remain uncertain.

It is challenging for smaller funds like AB Value to acquire positions in global portfolios or Asia- or China-focused operations being divested by global LPs. However, the firm has benefited from deal flow created by geopolitical tensions, such as when Taiwanese investors have sought exit solutions for investments in China-based assets. The investment in the CDIB Capital CV is one example.

“If you are not a public company, it is difficult to take advantage of China policies. That’s why there is an incentive for them to work with a fund and, in the future, to potentially sell to a listed company or a global firm with supply chain ties,” Hayashi said.

In Southeast Asia, demand from GPs and LPs for secondary solutions is rising as a challenging IPO market creates more GP-led situations. But meeting this demand may require flexible structures, as bid-ask spreads in the region now exceed those in China and India, Tang observed.

In India, a strong IPO market has made it difficult to secure sufficient discounts, although the direct secondaries market is active. AB Value began exploring India in 2023, but found sellers reluctant. The goal is to target deals with relatively low entry multiples in the mid-single-digit range. Such opportunities are difficult to find.

Hong Kong has proved similarly challenging, with IPO candidates tending to be held by domestic or sector-focused funds such as those specialising in electronic vehicles. This leaves little room for participation by international investors, Hayashi said.

“We’re still looking at if international investors are going to come back to the market to support mutual funds. At this moment, it’s still domestic. So, it’s very difficult for the US dollar-based investors like us to find the transactions,” he added. “Besides, an IPO doesn’t mean that you have a distribution yet.”