As a result, private equity firms are looking more to hedge funds not just to buy corporate debt but also to co-invest.
The Reuters Summit comes amid unprecedented growth in both industries. Hedge funds now number more than 8,000 worldwide, with more than $1.4 trillion under management.
There has been a similar surge in private equity fund raising and deal making.
The $451 billion raised in 2006 by 717 funds is the highest amount ever raised in a single year, beating the previous record of $315 billion in 2005, according to Private Equity Intelligence Ltd.
In the first quarter, private equity M&A jumped 82 percent to $197 billion, according to Dealogic.
Asia's hedge fund industry in particular saw explosive growth last year, powered by double- and even triple-digit stock market gains and an influx of cash into the region's hedge fund managers.
Asian assets under management rose 30 percent to $132 billion at the end of 2006, according hedge fund research firm and consultancy Eurekahedge, and has since risen to $141 billion managed by more than 1000 funds.
Asia's hedge fund industry still remains small by global standards as some analysts have estimated hedge fund assets topped $2 trillion worldwide.
But the Asian industry is showing encouraging signs of maturity. Industry figures point to the launch of Abax Global Capital Ltd., a hedge fund start-up that reportedly could raise more than $1 billion.
JOINED AT THE HIP
Buyout firms and hedge funds have historically distanced themselves from each other. Not so long ago, it was possible to do a leveraged buyout without a hedge fund getting involved.
Just two years ago, Henry Kravis, co-founder of buyout firm Kohlberg Kravis Roberts & Co. (KKR) KKR.UL, speaking at a conference in Frankfurt, said hedge funds were good stock pickers but should be kept out of investing.
"Hedge funds are not set up to build value in companies over the long term," he told an audience of private equity firms and their investors here.
Fast forward to last January, when KKR was involved in the buyout of for-profit education company Laureate Education Inc. LAUR.O Joining KKR in the investor group was S.A.C. Capital, among the largest hedge funds in the world.
(Additional reporting by Jeffrey Hodgson in Hong Kong)
© Thomson Reuters 2009. All rights reserved.
| India Investment | Nov 23 - 25, 2009 | Country Summits |
| Global Finance | Nov 16 - 19, 2009 | Financial Services / Exchanges |
| Health | Nov 09 - 12, 2009 | Health |
| Autos | Nov 02 - 4, 2009 | Autos |
| Middle East Investment | Oct 26 - 28, 2009 | Country Summits |
