Australia buyout industry seen riding strong on exposure to Asia

* Deals in Australia being done with an eye on Asia

* Majority of deals have been mid-sized

* Some say Australia's share of regional buyout funds dropping

By Victoria Thieberger

SYDNEY, March 3 (Reuters) - Australia's private equity firms and top global buyout firms are still finding attractive deals in the local market through companies that are leveraged to Asian growth, despite an increasing investor focus directly on China and India, industry executives said on Thursday.

"I can't see a single negative for Australian private equity from Asian growth," said Archer Capital Managing Partner Peter Wiggs, adding that for investors Australia was not an "either/or proposition" compared with larger Asian markets.

"There's still more capital sloshing around globally than you can poke a stick at," he told a private equity industry conference. Archer, one of Australia's four largest buyout firms, has $2 billion in assets under management.

There has been a flurry of private equity deals in Australia and New Zealand in recent months, capped by Wednesday's giant $9.4 billion asset purchase of Centro's U.S. shopping malls by Blackstone Group LP , and some of them have taken clear aim at firms that benefit from the Asian growth story.

But with leverage availability still below pre-crisis levels and debt more costly, most of the deals have been in the mid-size market, of businesses with an enterprise value around A$200 million to A$700 million.

Global private equity giant Carlyle now has three funds with investments in Australia.

The Carlyle Infrastructre Partners Fund last week bought a 15 percent stake in Qube Logistics, an import and export logistics supply firm, for A$116.5 million. It was the fund's first foray into the local market.

Carlyle is keen to invest more of its $2.55 billion third Asian fund in Australia, particularly in sectors that can benefit from the region's boom, Carlyle Managing Director Simon Moore told Reuters on the sidelines of the conference.

As a destination for private equity capital, Moore said his Hong-Kong based colleagues at Carlyle see Australia as a relatively safe place, with transparent markets and healthy companies.

EYE ON ASIAN EXPOSURE

Exposure to Asia, or the ability to grow a customer base in the Asian market, is part of the equation for Pacific Equity Partners (PEP), one of its senior executives said.

"If we can find a company that has Asian exposure already or has the potential to be there, that helps in terms of the overall consideration," PEP Managing Director Simon Pillar told the AVCJ Private Equity and Venture Capital Forum.

PEP, which raised Australia's largest buyout fund of A$4 billion at the height of the boom in 2007, recently sold its New Zealand poultry producer Tegel Foods to Asian buyout fund Affinity Equity Partners for NZ$605 million.

Pillar said Affinity would be able to expand the business into Asian markets. "They can take it to the next level of growth and value; we had started taking that business to Asia but we are not in Asia," he said.

PEP also owns New Zealand's largest biscuit and snack food maker Griffin's Foods, which could be attractive to global food companies and is expected to come back to the market in the second half of 2011.

However, some of the investors in private equity funds were less sanguine that Australia would continue to attract offshore interest when global funds could harness growth in China or India directly.

In terms of raising funds in Asia and attracting deals, Australia's share of regional investment dollars has started to diminish, said fund-of-funds Harbourvest Partners (Asia) Managing Director Philip Bilden.

"The market grabber of share has been China and India over past few years. Economic growth rates are driving investment decisions as well as the sheer size of those markets," he said.

Fund-raising is a more arduous task than in pre-crisis times with skeptical investors often asking for three or four meetings before committing capital, compared with one meeting at the height of the boom, and fund closings taking one to two years, industry executives said. (Editing by Muralikumar Anantharaman)