It is a well established trend that Australian LPs are increasingly looking to internationalize their private equity exposure, arguably at the expense of domestic GPs. Foreign investors looking to enter Australia are not deterred. Sebastiaan van den Berg, managing director at HarbourVest Partners, has no plans to scale back, citing the country’s stable economy, rule of law and experienced GP community.
He does admit, however, that the retreat of domestic LPs leaves their foreign counterparts in a bind. "Perhaps from a more selfish perspective, less capital driving up valuations is better - to the extent that less capital is raised, we probably benefit from that net-net," he tells AVCJ TV. "But we want the GP community here to be successful and it's important for Australian LPs to be long-term active participants."
Nevertheless, an increasingly discerning domestic LP base and weaker economic conditions - Australia's natural resources sector is thriving, but this doesn't extend to the retail space, for example - have created more challenging conditions for GPs. Van den Berg doesn't expect everyone to survive, noting that, unlike six years ago, a rising tide is no longer floating all boats.
"What is happening now, as it becomes increasingly difficult to rely on the global macro environment and multiples arbitrage, the only way you can get attractive returns is through strong operational improvements," he says. "Only a few GPs are really good at that, so you probably will see some go out of business or merge and consolidate. That in itself is not a bad thing."
David Li, managing director and head of China at Warburg Pincus, has resigned to set up his own company. Julian Cheng and Frank Wei have duly been appointed to lead the firm’s China business.
CDIB Capital, the PE arm of Taiwan’s China Development Financial (CDF), has invested $30 million in Anhui Dong Jin Renewable Resource Technology, a Chinese renewable resources producer.
China-based Sinovac Biotech, which earlier this week became the target of a take-private bid from its chairman and SAIF Partners, has received a competing offer from a consortium that includes China International Capital Corporation (CICC).
Chinese state-owned conglomerate Beijing Enterprises Holding (BEHL) has agreed to buy EEW Energy from Waste, a German waste management company, from EQT Partners for EUR1.44 billion ($1.6 billion).