Fundraising has become difficult for Asian private equity firms, and the general outflow of capital from emerging markets will make it more so, argue industry executives.

"There is no more easy money," said Charles Ong, co-chairman and co-CEO at RRJ Group at a forum last week hosted by the Hong Kong Venture Capital and Private Equity Association. "Or, if you are a Star Wars fan, Yoda would say, 'easy money, no more'."

The line from one of the biggest homegrown players in Asian private equity got a laugh from the audience, but the topic is of broad concern, including among global GPs operating in the region.

“GPs underestimate the time and the difficulty in raising money,” said Jonathan Hulbert, head of regional marketing and investor relations at Apollo Management.

Apollo, with $160 billion of assets under management, enjoys a long history and a brand name. But that’s not a guarantee of quick assets, said Hulbert. “The name helps us start the conversation [with potential investors], but then you’re in a beauty parade with all the other funds in that space.”

Other big players agree that more time is now needed for fundraising. David Tung, regional head of investor relations at The Carlyle Group, said an Asian buyout fund that it launched in 2013 took 18 months to close, instead of the 10 to 12 months that used to be typical. In the end, the fund was modestly oversubscribed, but he said the firm was surprised that it took so long to raise assets, given Carlyle’s track record and brand name.

He said GPs may need to offer discounts to early investors or provide low-cost co-investments, particularly to institutions, such as Asian sovereign wealth funds, that want to experience the GP’s investment process first-hand before committing large amounts of capital.

It’s even harder for newcomers. David Lee, head of operations and risk at China Everbright ReinFore Asset Management, a new China-focused growth equity manager, said his firm learned some difficult lessons with its first fund raising, which is just now closing.

“We were caught off guard in the financing process,” Lee said. As a first-generation GP, established in early 2014, ReinFore relied on a relationship with a giant conglomerate, China Everbright, rather than set up its own coverage or marketing team.

It opted to focus on a small number of limited partners (LPs, ie investors) that it thought would favour the new firm’s strategy, rather than cast a wider net. That helped, but Lee said it was a mistake not to come out early with an anchor investor. “We lacked a large LP with conviction,” he said, although an early investor did evolve into a major backer over time.

What compensated for a lack of a track record or an organised marketing effort was the firm’s transparency; Lee said ReinFore met institutional standards at the outset, so that LPs that did conduct due diligence would like what they saw.

Mark O’Hare, London-based CEO at data provider Preqin, said figures from about 7,000 GPs worldwide confirmed that Asia-based GPs are having a harder time fundraising than their peers in North America or Europe.

Generally for private equity, “the metrics look pretty good", O’Hare said. But the trend of capital flight from emerging markets is affecting GPs as well as long-only fund managers. “That is creating opportunities for investment and challenges in fundraising,” he said of Asian GPs.

Whereas in the wake of the global financial crisis, Asian GPs won 15% to 18% of new LP allocations, today they are getting only 10%. “Investors’ views on emerging markets are generally ruling the roost,” said O’Hare.

That difficulty is not about to go away. Apollo’s Hulbert said LPs in the US and Europe continue to expect a premium from Asian GPs. “Their perception of risk and reward is that they need a better return from an Asian strategy, even if that view is not warranted,” he said.

Vish Ramaswami, managing director at investment consultancy Cambridge Associates, said Asian GPs still needed to do a lot to educate LPs, including emerging ones from the region. “You need to make people understand what your product represents, and create that resonance,” he said.