Warburg Pincus, Advantage honored at AVCJ Awards

A total of 16 prizes were presented – some in person, some remotely; the full ceremony can be viewed here – across categories recognizing excellence in fundraising, investment, exits, responsible investment, and value creation. The AVCJ Special Achievement Award, which acknowledges the role played by an individual in the development of the industry over a long period of time, went to Lip-Bu Tan of Walden International.

Warburg Pincus was named large-cap firm of the year following a 12-month period in which it realized $2.5 billion from investments in China and Southeast Asia while putting to work another $2.5 billion. ESR accounted for the bulk of the distributions through a partial exit at IPO and subsequent share sales. Warburg Pincus established the real estate logistics provider with several Chinese entrepreneurs in 2011 and supported a regional expansion.

“What surprised us a little bit was the vision was to create the leading Chinese logistics real estate platform, but because of our success in China our ambitions started to grow over time and then it became an opportunity to create the leading pan-Asian real estate logistics platform, and it has played out even beyond our own wildest expectations,” said Jeffrey Perlman, head of Southeast Asia and Asia Pacific real estate at Warburg Pincus.

The private equity firm’s new investments in China included participation in the $8.7 billion take-private of 58.com and in growth rounds for the likes of Perfect Diary and Haihe Pharmaceutical. Julian Cheng, co-head of China at Warburg Pincus, who collected the award, reflected on how far the industry has developed since he embarked on his career.

“One of our first consumer deals 20 years ago was a Chinese ceramic toilet manufacturer. This year we did Haihe and Perfect Diary, a biotech company and an online cosmetics company,” he said. “Ten years ago, when I invested in 58.com’s Series C round, the company had barely $10 million in revenue. This year we did an $8.7 billion take-private in the US, the second largest of its kind.”

Advantage’s victory in the mid-cap category represents the second time the Japanese firm has won the firm of the year prize, following a triumph in 2007. Within 12 months of that, the industry was dealing with the global financial crisis. Richard Folsom, a representative partner at Advantage, joked that he hoped he wasn’t invoking the PE equivalent of American football’s "Madden curse," while noting that winning this time around is in part a reflection of the firm’s progress over the past decade.

Highlights of Advantage’s year include closing its sixth Japan buyout fund at the hard cap of JPY85 billion ($790 million) and selling a minority stake in the management company to Tokyo Century Corporation, a longstanding LP. The latter move is the first time a Japanese GP has addressed succession planning in a meaningful way. Folsom described it as part of a larger transition in governance, decision making and ownership to ensure “the firm can long outlive the founders.”

Carlyle’s two awards included one for fundraising in Japan – the firm won the large-cap category after closing its latest country-focused vehicle at JPY258 billion – and another for IPO exit. The IPO in question was India-based SBI Cards & Payment Services, which raised INR104 billion, allowing Carlyle to make a partial exit worth INR70.4 billion.

The venture capital and mid-cap fundraising prizes went to Ince Capital Partners and Ascendent Capital, respectively. Meanwhile, each of the three deal of the year awards went to minority investments featuring multiple participants: Indonesia agricultural technology start-up TaniGroup, Chinese cosmetics brand Perfect Diary, and India-based digital assets business Jio Platforms.

Morgan Stanley Private Equity won small-cap exit of the year for China Feihe, and Affirma Capital took top honor in the mid-cap category. Affirma’s decade-long journey with Korea-based Kolon Water & Energy featured numerous twists and turns before ending earlier this year with a KRW1 trillion ($855 million) trade sale to SK Group.

“We failed to go IPO twice, we changed CEO more than four times, we took over a controlling stake and gave away our put option, we changed the entire business model, and now we are facing a global pandemic. But we never gave up. I am grateful to my team who stayed focused and kept the promise to return capital to investors,” said Taeyub Kim, a partner and head of Korea at Affirma.

In the categories decided by specialist judging panels rather than by a combination of recommendations from judges and a public vote, Olympus Capital won the responsible investment prize for its work on Canvest Environment. Two operational value-add awards were presented, with both going to Australia-based deals. Mercury Capital was recognized for its work on Nexus Day Hospitals, while Affinity won plaudits for ticketing-turned-live-events business TEG.

This was one of two exits secured by Affinity towards the end of 2019; the other was Velocity, the frequent flier business of Virgin Australia. COVID-19 has since caused significant damage to live events and airline operators alike. Asked whether he possessed a crystal ball, K.Y. Tang, chairman of Affinity, wryly observed that sometimes it is better to be lucky than smart.

“We don’t have a crystal ball and we aren’t smart enough to predict the future, but at Affinity we do have a disciplined approach to handling exits,” said K.Y. Tang, founding chairman and managing partner of Affinity. “Exits in Asia don’t come about naturally, they take a long time, so you really need to have a plan and prepare. It’s all about being disciplined about the process.”

Lip-Bu Tan’s career in venture capital spans more than 35 years, presumably long enough for luck to even out and ability to shine through. Walden-backed portfolio companies have completed 115 IPOs and been the target of 85 successful trade sales since 1984. Tan is inextricably linked to the rise of technology hardware in Asia, notably through his extensive investments in semiconductor manufacturers and his longstanding association with SMIC, which listed on the Star Market in July.

Tan - one of three venture capital investors that seeded AVCJ - was also an early backer of the likes of Sina, Mindtree, Wuxi Little Swan, and Mindray Medical. He noted that he remains focused on identifying the next generation of standout start-ups.

“I am extremely excited about the opportunity of investing in technology, especially with the ‘five-generation waves’: 5G, industrial transformation and industry 4.0, autonomous driving, hyperscale infrastructure build-outs, and AI [artificial intelligence] machine learning. On top of that is data analytics and the use of data to do something to transform industries. That is something I’m investing in heavily today,” Tan said. 

The winners in full:

• Fundraising of the Year – Venture Capital: Ince Capital Partners I (Ince Capital)
• Fundraising of the Year – Mid Cap: Ascendent Capital Partners III (Ascendent Capital Partners)
• Fundraising of the Year – Large Cap: Carlyle Japan Partners IV (The Carlyle Group)
• Deal of the Year – Small Cap: TaniGroup (Golden Gate Ventures/Intudo Ventures/Openspace Ventures/BRI Ventures/Tenaya Capital/UOB Venture Management)
• Deal of the Year – Mid Cap: Perfect Diary (Boyu Capital/Gaorong Capital/Hillhouse Capital/Hopu Investment/Longhu Capital/Tiger Global Management/VMG Partners)
• Deal of the Year – Large Cap: Jio Platforms (Abu Dhabi Investment Authority/General Atlantic/Intel Capital/KKR/L Catterton/Mubadala Investment/Public Investment Fund/Qualcomm Ventures/Silver Lake/TPG/Vista Equity Partners)
• Exit of the Year – IPO: SBI Cards & Payment Services (The Carlyle Group)
• Exit of the Year – Small Cap: China Feihe (Morgan Stanley Private Equity Asia)
• Exit of the Year – Mid Cap: EMC Holdings (Affirma Capital)
• Exit of the Year – Large Cap: Velocity Frequent Flyer (Affinity Equity Partners)
• Responsible Investment Award: Canvest Environment (Olympus Capital)
• Operational Value Add Awards: Nexus Day Hospitals (Mercury Capital) & TEG (Affinity Equity Partners)
• Firm of the Year – Mid Cap: Advantage Partners
• Firm of the Year – Large Cap: Warburg Pincus
• AVCJ Special Achievement Award: Lip-Bu Tan

Many thanks to the judges...

Main categories: AlpInvest Partners, Asia Alternatives, Azimuth Asset Consulting, Future Fund, HarbourVest Partners, HQ Capital, International Finance Corporation, LGT Capital Partners, Morgan Stanley Alternative Investment Partners, Pantheon, Portfolio Advisors, StepStone Group, Unicorn Capital Partners

Responsible Investment Award: Asian Development Bank, Control Risks, EMPEA, International Finance Corporation, LGT Capital Partners, Turnkey Group

Operational Value Add Award: AlixPartners, Alvarez & Marsal, Anchor Strategic Partners, Bain & Company, KPMG, PwC

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• Topics
• Funds
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