With global private equity investors principally focused on China, Scott Voss, managing director of HarbourVest Parners, argues that now is the time for long-term players to target undervalued assets in Japan.
"China is a growth story and that means high prices are being paid and there is arguably more volatility that could happen," Voss tells AVCJ TV. "In Japan we believe there is a buying opportunity and it's a contrarian view. Good companies can be bought at low prices, and that's an important part of our portfolio construction strategy."
Japan's strengths are manifested in its relative predictability compared to younger markets in the region. The economy is large and well established, business practices can be trusted, and private equity is known quantity from venture capital to buyouts to secondary transactions. The disadvantages, as Voss seems them, are common to many markets: limited liquidity doesn't facilitate exits and extending the holding period for an asset can damage returns.
But he stresses that these risks should not dissuade investors who are in for the long haul. "As institutional investors it's important to be long-term, to invest through cycles and not be influenced by the psychology of the markets around you," Voss adds. "My advice to institutional investors around the world who pull back when they should be piling in is to maintain a very disciplined time diversification asset allocation strategy."
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South Korea continues to solidify its position as a premier destination for Asian private equity and venture capital investments. In 2014, nearly US$11 billion was invested into South Korean companies with exits topping US$8 billion, the highest return figures in the last 10 years. It is easy to see why international and domestic GP's hold South Korea in high regard, being one of few Asian destinations where large leveraged buyouts are possible.
Venture capital is also gaining momentum as the Park Geun Hye-led government continues to advance on initiatives to promote innovation and foster SMEs. With capital inflows and creative input from local and international VCs, South Korea is living up to its reputation as a flourishing venture ecosystem as we witness the rise of angel consortia, accelerators, and local offices for established VC funds.
This intensive and highly focused event will provide front row seats into one of Asia's most vibrant private equity markets. Key players will share their views on private equity and venture capital in Korea, Asia and beyond.
15 September 2015, South Korea- Westin Chosun, Seoul