VIDEO: PE leaders discuss the industry's challenges
In the lead-up to 2011, private equity leaders spoke to AVCJ about the biggest challenges they think the industry is facing, ranging from GP/LP relations to the wider economic environment
From a GP's perspective, Baring Private Equity Asia's Founder and CEO, Jean Eric Salata, pinpointed the biggest problems as the amount of capital coming from the public markets as well as regulator risk, while Chairman of Castle Harlan, Leonard Harlan, said that the downgrading of fees being paid to buyout firms has put PE players at a disadvantage.
"That is a little shortsighted because, for us to compete for our talent, we're competing against investment banks and such who are providing enormous bonuses and salaries that are earned on an annual basis," Harlan said. "The idea of really crimping the compensation in the short run can be self-defeating."
Meanwhile, LPs Lawrence Unrein, Global Head of PE & Hedge Fund Groups for JPMorgan Asset Management; Markus Ableitinger, Director of Capital Dynamics; Steven Cowan, Managing Director of PCGI; and Marcus Simpson, Head of Global PE at QIC Ltd. cited factorus such as the economic uncertainty, Asia's fast investment pace, and GP relationships regarding communication and trust among their biggest concerns.
Dennis Montecillo, CEO and Senior Managing Director Diamond Dragon Advisors Limited, also echoed these concerns, adding that LPs his firm advises have also said that GP transparency remains a hurdle in Asia, as well as funds' inability to mould their private equity models to something flexible in Asia.
Read more on what industry leaders predict for 2011 in AVCJ.
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