Volatility drives opportunities in Southeast Asia - AVCJ Forum

Kyle Shaw, founder and managing director at China, Malaysia and Singapore-focused Shaw Kwei & Partners, said that fund managers should welcome short-term regional disruptions, since such stresses are likely to lead worried entrepreneurs to seek the support of longer-term managers such as private equity. GPs can paint themselves as sources of stability for company owners facing stormy seas.

"I don't think that right now is more or less volatile than over the last 25 years," Shaw added. "Certainly if you go back the Asian financial crisis in 1998 and 1999, or if you look at the outbreak of SARS, things were a lot more stressful here in Asia."

Peter Amour, the CEO of AIF Capital, agreed that current levels of volatility are no more worrying than those in previous years. He described the challenge in the current environment as one of staying disciplined and not chasing after current trends; GPs must instead emphasize their own strengths and the value that they can bring to potential investee companies.

Even declining growth rates need not necessarily cause investment opportunities to dry up. T.J. Kono, a partner at Unison Capital Korea, reminded the forum that low growth has been a fact of economic life in Japan and South Korea for decades now, and this has created a unique set of openings for private equity to assist corporate leaders with their M&A or reorganization strategies.

"It affects SMEs [small and medium-sized enterprises] as well," Kono added. "You see family owners who are asking, ‘Do we reinvest in a business that's going to grow a couple percent, or cash out?' It's a real dilemma for them."

Standard Chartered Private Equity Managing Director Nainesh Jaisingh said that Southeast Asia is also becoming more attractive because of the growth of experience in the market and the establishment of a stable of talented managers in recent years.

"Southeast Asia has been more of an importer of management talent over the last 10-15 years, as opposed to other regions," Jaisingh said. "That's changing. There's a lot more homegrown talent and a lot more seasoned management here now."

Shaw characterized the current Southeast Asian investment market as the best he has seen in the past 25 years in terms of the number of opportunities and the ability of GPs to effect changes in their investee companies. More than that, the growing awareness of private equity's potential benefits means target companies have a better understanding of what an investment can mean for them.

"I use my mother's friends as a sample group," Shaw said. "Fifteen years ago they kept saying ‘But you're a private banker' when I explained what I did. Today it's common knowledge what private equity can do and how we function. And so when you go and talk to a company they understand where you're coming from and they have certain expectations."

The AVCJ Singapore Forum is taking place in Singapore on July 20-21. For more information, go to www.avcjsingapore.com.

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

• Topics
• Southeast Asia
• GPs
• Buyout
• Singapore
• Standard Chartered Private Equity
• AIF Capital
• Unison Capital
• Shaw Kwei & Partners
• AVCJ Events