Asian private equity: Education never ends

Emerging Asia was inevitably the star performer and investors have taken notice, allocating ever larger amounts to Asian partnerships, either directly, under the guidance of advisors or through fund-of-funds.

However, after attending the AVCJ Private Equity & Venture Forum - Europe in London last week, I was quite surprised to note that Asia is still perceived negatively by many European investors. This is, of course, the reason why we held the event: to educate European LPs on Asian private equity by offering direct access to GPs in the comfort of a London conference hall. There were approximately 100 attendees and just over one third of them were LPs.

While those who've been allocating for a few years are well-versed in how business is conducted in the various markets of Asia, newer and would-be participants regard it as the wild wild East (and rightfully so, if they listen to horror stories espoused by some LPs who picked the wrong manager). Questions regarding risk in Asian investments - whether it involves regulation, politics, legal issues or corruption - came up several times during the event.

Notably, one LP in the audience asked the opening panel, chaired by Squadron Capital CEO David Pierce, about risk premiums for investments into emerging markets. The panelists, Francis Leung of CVC Capital Partners, Nick Bloy of Navis Capital Partners, Girish Kumar of Apollo Global Management and Joe Bae of KKR, said that their firms focused on absolute returns, with each deal judged on its own merits.

It is a fair point. Any private equity professional with a reasonable track record in Asia should be able to address problems that inevitably arise from time to time.

The issue was raised again during sessions on China, India and Southeast Asia, as well as - more surprisingly - in a question on politics put to Simon Pillar of Pacific Equity Partners as he made a presentation on Australian private equity.

What is the takeaway? Surely, Asia's private equity industry must do a better job of communicating to newer investors the intricacies of doing business in different markets, structuring deals and how risk factors can be minimized. This is essential if Western investors who have expressed an interest in building an exposure to Asia are to turn their words into action.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• LPs
• GPs
• Europe
• Europe
• LPs
• GPs
• AVCJ Events