Filipino rise demands a sharper focus – AVCJ Forum

"The key challenge for private equity is to showcase what value we can bring to the table other than capital because capital is not the bottleneck," said Florian Marquis, senior vice president for private equity in Asia at Partners Group. "In many markets PE has not been so successful and it stills struggles with that history, but the Philippines is a new and exciting market. So it's really up to private equity firms to differentiate what they stand for and how they can benefit companies and management teams."

In addition to demonstrating more of a competitive edge, GPs are advised to think more broadly about establishing a positive initial impression for the asset class as it takes root in the country. This is tied to understanding the requirements of the family business community at different phases of generational ownership.

"It's a highly personal way of doing business. When private equity funds look at family businesses to potentially partner with, a big part of the diligence is trying to figure out if there is a fit in terms of culture and personalities," said Paolo Maximo Borromeo, managing director at Ayala Corporation. "It has to work from an organizational and governance perspective – not just from a financial perspective."

The comments followed an opening address by David Carbon, managing director for economic research at DBS Bank, in which he projected that Asia's growth in the next 25 years would equate to the addition of three Eurozone-sized economies. This prompted speculation on the key near-term growth sectors in the Philippines, especially in light of the country's status as one of the region's only non-ageing jurisdictions.

Real estate, banking, infrastructure, transport and manufacturing were flagged as important areas as well as human capital investments such as healthcare and education. Certain segments of the consumer sector, such as food and beverage, are also expected to see strong growth as a result of rising domestic consumption and internet and mobile penetration.

Enrique Gonzalez, president and CEO of IP Ventures, is bullish on the early-stage technology space in particular, although he noted that the area has yet to develop from a capital markets perspective. "The hot money moves in and out quite quickly," he said, in reference to high liquidity and concerns about exits. "Any softness in the capital markets, changes interest rates or inflation. Issues that could change the macro picture of the Philippines are things we monitor closely."

The overarching macro concern, meanwhile, remains political stability - a topic of great interest following election of President Rodrigo Duterte. "From a political and economic standpoint, what's important for the country is that we have a stable enough environment that is conducive to do business," Borromeo added. "Anything that shakes that up is something that we all should be vigilant about."

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