LPs must address staffing constraints as Asian opportunities multiply

“You have to prioritize and be comfortable not taking every meeting or every coffee, because you could really spend most of your week doing that,” said Liam Coppinger, Hong Kong-based managing director at Manulife Capital, a Canadian investor that has deployed about $800 million in Asia since 1998. “We as a team try and sit down once a month and map out what everyone’s going to be focusing on, and make sure we stick to our timelines and deliverables.”

LPs alongside Coppinger confirmed that members of their investment teams were responsible for about 10-15 fund relationships each. Although this ratio has proven workable in the past, it has started to become difficult with an increase of Asian deal flow and expanded potential to participate in deals outside of a traditional LP role.

Piau-Voon Wang, co-CIO at China’s Noah Holdings said about half of his firm’s 23-strong asset management team focused on fund investment while the other half focused on co-investment and secondaries. “On the fund investment side, it’s quite a scalable business, provided you have time to nurture the relationships,” he said. “The key challenge is when you start getting involved in the deals. You need people who can follow through, execute on the ground and stay current.”

For LPs operating out of Asian markets with less developed private equity talent pools, database expansion was found to require outside advice. Nissay Asset Management, a division of Nippon Life Group that deploys up to $250 million a year across Asia with a team of 13, said it used this method to enhance its reach internationally.

“As Japanese, when you fly out elsewhere in the world, it’s really impossible to cover,” said Yuka Hata, chief portfolio manager, alternatives and fund investment at Nissay. “So our business model is really to find the right partner to work with, and that’s working quite well for us.”

LPs also identified ways of stretching the capacity of teams by maximizing internal resources. This approach may be particularly useful for smaller groups within larger organizations such as Lockheed Martin Investment Management Company (LMIMCo), an investment arm for two pension funds under the US aerospace giant that does about 25% of its business in Asia.   

LMIMCo’s Hong Kong office employs a team of seven to cover about 80 fund manager relationships. Although plans are in place to reduce this burden by scaling back the overall GP book - but not the allocation to private equity - current operations make use of the parent company’s operational depth.

“We double team to work on a fund evaluation,” said Joseph Chang, LMIMCo’s head of Asia private investments, noting that his team alleviates resource pressure through consultations with an in-house stock trading unit. “I’ll lead the project on my end with the GP and target company, and I’ll always run by my colleagues on the public equity side, who may have views on the markets and sectors.”

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• Topics
• LPs
• Performance
• Portfolio management
• Asia
• USA
• Canada
• Japan
• China
• Noah Holdings
• Nissay Capital