Large cap Asian LPs continue to prioritize co-investment - AVCJ Forum

"We would like to see more co-investment deals brought to us," Mohamad Nasir Ab Latif, deputy chief investment officer of EPF, told the AVCJ Forum in Hong Kong. "I think the way going forward is to maintain deep relationships with not too many GPs."

EPF has $170 billion in assets and, having started deploying capital overseas across various asset classes in 2010, it now has a 10% alternatives allocation, which includes private equity, infrastructure and real estate. QIC, meanwhile, has been investing in private equity for 11 years and has A$5.2 billion ($4.2 billion) of its overall A$78.5 billion portfolio deployed in the asset class.

More than one third of QIC's PE allocation is co-investments or direct deals, and Marcus Simpson, head of global private equity, noted that these were largely sourced through a network of just 35 portfolio GPs. He described the group as "more of a theme investor than one that goes around the world trying to find GPs that might be top quartile in the future." As a result, there is a bias towards sector-specific managers with fund sizes of $250 million to $1 billion.

Asked about the challenges many LPs face in finding attractive investments, Simpson cited the fact that the industry is at a late point in a long cycle. QIC has subconsciously raised the bar in terms of what opportunities it will consider and it is also targeting a more diverse array of transactions. "We are finding new and different types of investment where we are stepping away from the competition," he said.

For EPF, the pressure point is quantum of deployment. The pension fund entered the asset class through fund-of-funds relationships but is increasingly backing GPs directly as it tends to an overall portfolio growing by $14 billion a year. "There really is a case for us to significantly increase our investments in the alternatives space. We are on 10% while some more experienced investors globally are on 30-40%," said Latif.

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

• Topics
• LPs
• Southeast Asia
• Australasia
• AVCJ Events
• Australia
• Malaysia
• EPF
• QIC