By Gabriel Chen

THE action is picking up for the private equity (PE) sector here after it was left on life support by the near collapse of the global financial system last year.

More deals are being sewn up and negotiations are being taken to later stages as confidence surges amid a feeling that the worst is over.

Buyout firms - they typically use cash and loans to buy entire firms or majority stakes - have also been lured back by valuations that remain attractive despite the surging share markets of recent months.

Singapore-based Halcyon Investment Corp is one that has been gearing up. The private buyout firm is in 'advanced late- stage negotiations' to take stakes in several companies, including a local offshore oil and gas company.

Managing director Robert Meyer told The Straits Times that the buyout is valued at anywhere from $30 million to $50 million, and if concluded, will be the company's first deal since December 2007.

Halcyon stayed out of acquisitions last year after financial markets took a turn for the worse. 'We didn't know how badly demand would be impacted. Now we're prepared to commit capital,' Mr Meyer said.

He remains confident it can secure the loans it needs as the balance sheet of its target firm is strong.

Halcyon is not alone to feel the industry has turned the corner.

Oxley Capital is in the process of sewing up the first phase of a US$300 million (S$424 million) deal in the biofuel sector, said Mr Mark Pawley, chief executive of the Singapore-based firm. 'We've 25 deals under review at the moment, different sizes and different amounts,' he said.

Vickers Venture Partners has recently closed two deals - buying a stake in Singapore-based online firm MatchMove Games and a slice of Beijing's ShangMail, which offers a kind of mobile phone mail service.

Transpac Capital, a local PE house, is sizing up companies in the pharmaceutical and manufacturing sectors in China and South-east Asia.

'At the moment, we're in the due diligence stages. We're not in a hurry and we're looking at their peers for comparison,' said partner Stanley Cheong.

According to the Asian Venture Capital Journal, PE investment in the Asia-Pacific region in the second quarter rose to US$12.1 billion - up on the US$10.3 billion in the first quarter.

The PE industry is a notoriously difficult one to track, as many deals are done away from the public eye. Still, analysts estimate that the firms have a total war chest in excess of US$20 billion to spend on buyouts in Asia - and that excludes leverage.

The share market revival actually benefits many PE firms as it means they can cash in their investments for a reasonable return, said Mr Kelvin Chan, senior vice- president of Partners Group, a specialised alternative asset manager that invests in private equity, private real estate and hedge funds.

Many PE firms, notably the buyout shops, have historically sold firms at regular intervals and made payments back to their investors. Recently, though, they have been unable to exit their holdings.

The rising equity markets have improved the chances of PE firms exiting their investments via the likes of initial public offerings. This potentially provides fresh funding to recycle towards new opportunities.

Local PE firm Tembusu recently sold its stake in Singapore-listed Van Der Horst Energy, doubling the investment it made about three years ago.

This month, Tembusu tied up with a Chinese partner to launch a fund management company in Nanjing to manage their new US$80 million Nanjing Growth Fund.

Tembusu's chairman Andy Lim said that historically many PE funds made their best investment returns immediately after a recession.

'In this current economic recovery, two of our companies whose listings were deferred last year are scheduled to be re-listed in the first quarter of next year,' he said.

This article was first published in The Straits Times.