Being global is about being good, not big - AVCJ Forum

"We actually prefer to focus our business on, not global, but domestic markets," said Roy Kuan, managing partner at CVC Capital Partners. "There are some cases, such as European and American companies, where we have expanded globally. For example, with Samonite and Minit, we made some acquisition and expansion into Asia. But for Asian businesses, we actually more often carve-out an Asian or Asia-Pacific business out of a global company and focus on that market."

Earlier this year, CVC bought a controlling stake in office service provider The Executive Center from Headland Capital Partners - its first secondary deal in Asia in almost 10 years. The strategy is to retain the mid-sized company's focus on Asian markets - rather than expand further - but run it better.

Atul Kapur, co-founder and managing partner at India and Southeast Asia-focused Everstone Capital, added that being global is more about improving a company's corporate governance and ensuring its products meet global standards. Everstone does this with a view to facilitating exits to multinational buyers in the future.

It could be argued that India and China are both large enough domestic markets to satisfy most entrepreneurs. In the case of China, even if there is a desire to expand overseas, language and culture represent two key barriers.

"After few years of running the business, the founder becomes old and steps down as chairman of the company. Then they can hire a bunch of English-speaking multi-national trained CEOs and the company could become global," said Kathy Xu, founder and managing partner of Capital Today Group. "But it's not about the internet, because China is such a big market compared to other places in the world."

Changing management in order to re-position a portfolio company strategically is easy when the private equity investor has control. But minority investments remain the norm in China and companies are often leaders in their respective industries. Homer Sun, CIO of Morgan Stanley Private Equity Asia, noted that it can be difficult to persuade these companies to alter their ways of doing business.

"In the first month of conversation after closing [the transaction], the operational team will always focus on - what is the CEO headache?" said Sun. Once this has been addressed, and the investor has built up a level of trust with management, value-add strategies are easier to execute, he added.

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• Topics
• Greater China
• South Asia
• Buyouts
• Expansion
• Asia
• CVC Capital Partners
• Morgan Stanley Private Equity Asia
• Everstone Capital
• AVCJ Events
• buyout
• Growth capital