Onwards and upwards: Asia's PE growth trajectory

Private equity has graduated from its position as head of the alternatives asset class to spearheading wider private market investment strategies. Just a few years ago, most private equity firms had a focused approach with small adjustments based on the size of their current funds. This was true for both buyout funds and venture capital players.

Today the landscape looks very different. Most of the global firms with a presence in Asia have diversified their offerings. Buyout strategies were altered to accommodate growth capital years ago, but firms are now expanding up and down the capital structure. Distress, mezzanine and structured credit strategies are in place and in some cases real estate too.

Several global players no longer describe themselves as "private equity firms," preferring something along the lines of "private markets investor."

As for venture firms, they have diversified their funds to include larger growth capital deals as well as seed-stage investments. Most remain focused on specific markets, although Sino-US strategies are popular in some quarters, while a few of the bigger US firms have been franchising their brands out.

In terms of investments, naysayers having been predicting, for years, that with no financial crisis and China's growth slowing, the golden age of Asian private equity is over. This may be partly true but it should be remembered that capital can also drive a market. Bring together some of the smartest people in the financial world and tie compensation to their ability to make money for investors and you will see results.

Investment cycles will continue to give and take away, but Alibaba Group's IPO and the Oriental Brewery trade sale are proof that multi-billion dollar exits are still possible in today's market.

Private equity is - and always will be - a relationship business, with people the most important asset. As many of the founding fathers give up day-to-day duties to pave the way for a younger generation, we may see a short-term decline in the number of so-called "personalities." But the void will eventually be filled as other investment professionals rise to "rock star" status. And with the industry expanding its focus, there will be more people filling the space.

As somebody who has observed the industry grow from a small part of the region's financial services sector to the behemoth it is today, Asian private equity will find ways to grow.

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• Topics
• Fundraising
• Asia
• Fundraising