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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AVCJ is proud to announce the 13th Annual AVCJ China Private Equity & Venture Forum will take place on 10 & 11 June 2014 at the Park Hyatt Hotel in Beijing. Attendees will have the unrivalled opportunity to hear honest dialogue about this complex and compelling market from the leading GPs on the ground, as well as from some of the biggest domestic and international institutional investors.
10-11 June 2014, Park Hyatt, Beijing