Chepstow team builds on shared mid-market experience, strategy,

In the world of private equity, it is not uncommon to see senior people leave a well-established firm, start up on their own, and bring colleagues with them. It is however, relatively unique for nearly the entire top tier at two firms to quit after over a decade, and commit for the long term to a new vision. Warner and Price's recruitment of former colleagues engendered at the time of the resignations some hard feelings, say sources inside CLSA and HSBC; but for the private equity duo and for their team, the future in the Asian mid-market space looks bright.
 
Movers and shakers

David Paterson, founding shareholder and former MD of HSBC Private Equity (Asia) Ltd will join as a Director and Chairman of Chepstow’s Investment Committee. Michael Tsang, previously Deputy Managing Director responsible for Greater China in HSBC’s Asian private equity business, joined as a Managing Director. Genevieve Heng, formerly Managing Director of Growth and Expansion Capital in CLSA’s Asian private equity business will take on the role of Managing Director, responsible for advising on investments in Southeast Asia and India. And, Alvin Ho, who left CLSA as a Managing Director and co-product head, will join as MD, bringing his experience in greater China to the new outfit.

In an interview with AVCJ, Price and Warner described the team as having “come together very naturally.” Warner explained that the platform “has been attractive to people we’ve known and worked with over the years, who wanted to join us.” He added that as the team members are “at a certain stage in our careers… where we know what we’ve done and what we can do. There is a certain point at which you make that decision, and the six of us have all come to the same conclusion that this is what we want to do for the rest of our careers.”

Whatever the timeline, the process has not been a communal jump. It is understood that Heng handed in her resignation just days after Chepstow was publicly launched. Ho remained in the CLSA office until October 31, at which point he maintained he had not formally committed to another firm. Paterson, who founded HSBC’s Asian private equity business in 1988, and Tsang, who has been an integral member of the team for some time now, were surprise moves, according to insiders.

A new firm, with a long track record

Because these teams have worked together for more than a decade, respectively, Price says that the investment styles are “very, very compatible. They come from firms with a good track record, good people, and a good process, and we knew that already from having co-invested successfully in the past. The process is based on old old-fashioned fundamentals, which means a lot of analysis on risk, heavy due diligence, and a real questioning of, ‘What are the value drivers for this investment?’ I think that’s all very complementary.”

Adds Warner, “CLSA and HSBC have earned their positions as market leaders in mid-market private equity in Asia.. We were all important people within those firms and those firms have performed well over a long period.” For LPs, who are increasingly looking for teams with a depth of experience in the region, all of these factors bode well for Chepstow. And Warner says that discussions so far have been very positive, with the longevity of the team and range of expe rience, coupled with a fixed and unwavering focus on the mid-market space all playing significant roles.

A clear strategy

“We're focused on mid-market because we’ve done it successfully through several cycles and we believe that this sector is what drives Asia. This isn’t a prelude to a $3-4 billion fund that goes and does large buyouts. Both Vincent and I believe – as does the rest of the team – that mid-market is the place to be, and we will continue to be here,” explains Price. Equally, Warner says that their approach to building the business – a clear sign of industry wisdom – has been “measured and planned.”

And, he says, “Because of that we’ve had a strong [positive] reaction from all of the groups that we’ll be interacting with: potential investors, intermediaries, groups that might be classified as competitors – they have all welcomed this initiative.”

The duo describe their relationship with former firms as positive, which is perhaps reaching a bit for the moment. That said, as Price points out, “We have already put ourselves in a position to be a preferred mid-market partner, and in that role we want to partner with other key players, which certainly could include CLSA and HSBC.”

The team of six will all officially start in the New Year, “with all guns blazing,” says Warner.

 

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• Topics
• Buyout
• People
• Fundraising
• HSBC Private Equity
• CLSA Capital Partners