Best practices plus local skills give Asian GPs the edge - AVCJ Forum

"In the early days of private equity in Asia, global firms embodied best practice because they had been around longer." Weijian Shan, group chairman and CEO of PAG, told the AVCJ Forum. "By contrast the local firms didn't have the best practices but had the advantage of better connectivity, which justified their existence."

However, he added that Asian GPs increasingly recognize the importance of best practices with many local fund managers now populated - or, in the case of PAG, launched - by investment professionals from global private equity houses.

"Those Asian firms with best practices will continue and will do better." Shan said. "But if you are a global firm, then all of a sudden your the best practices will no longer offset the remoteness of your decision making."

K.Y. Tang, chairman and managing partner of Affinity Equity Partners, added that in the current slow growth environment local GPs are also under more pressure to become sophisticated portfolio managers.

"Very clearly there has been tremendous change in the market and we have had to adapt our strategy," he said. "In the past, we had higher growth rates in Asia but over the last two years, and over the next three years, we are seeing a much slower rate of growth and you have to create that growth for yourself."

As a result, he said, more GPs are involved in operational improvement, as well as focusing on business initiatives and pursuing regional integration strategies.

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