Industry experts predict next 25 years of Asian PE - AVCJ Forum

During a panel discussion on lessons of past 25 years of Asian private equity, moderator Dan Schwartz, chairman emeritius of the AVCJ Group, asked his panelists what they expected in the next quarter century.  

"You will find institutional LPs insisting on more co-investment, and private investors such as family offices will start doing more direct deals and investing less in funds," predicted Anil Thadani, chairman of Symphony Asia.

"I think it will be time for GPs to start innovating and thinking about how they can marshal this money that is trying escape. Institutional co-investors will try to argue for no fees, no carry while more direct investments will not involve a GP at all. So, GPs will have to think about other ways to insert themselves into that chain."

Meanwhile D. Brooks Zug, founder and senior managing director at HarbourVest Partners, offered a perspective on how macroeconomic trends in both Asia and the West would affect the market. His view is that the next 10-15 years would belong to developing markets.

"We in the US have lived on debt for the last 15-20 years everybody has leveraged up - the government, banks and individuals," Zug said. "While we were doing that, developing parts of the world did not use debt."

He added that the US was entering a deleveraging period and the best it could hope for was an average 2% annual GDP growth for the next decade. Developing nations in Asia and the rest of the world, however, still have the option to leverage up.

"I think we are going to see tremendous growth here and it will help the buyout business," Zug said. "I know the theme of the last few days has been that macroeconomic growth doesn't make for a successful buyout market, but I think these markets will have an effect on our business and in the next five years more than half of the money invested in this asset class will be in developing countries."

Bill Ferris, co-founder and executive chairman of CHAMP Private Equity, pinpointed the sectors that are most likely to benefit from these capital flows. He sees venture capital coming to the fore as a result of developments in life sciences.

"With incredible steps forward in medical science, bio-genetics and gene-sequencing, these innovations will present more opportunities going forward," Ferris said. "So I think venture capital will blow buy-out returns out of the room well within 25 years, probably in the next 10-15 years."

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• Topics
• Buyouts
• Venture
• AVCJ Events
• CHAMP Ventures
• HarbourVest Partners