China to remain world's leading emerging market – AVCJ Forum

"We are looking at emerging markets but nowhere compares to China and India," said Wayne Tsou, managing director and head of Carlyle Asia Growth Partners. "You might get huge returns from economies like Africa if you get in early but the game changer for the next couple of decades is Asia."

He added that private equity firms should take a contrarian view and look beyond the region's recent macroeconomic stumble, identifying the areas that are likely to experience rapid growth in the next wave of investment.

Although keen to talk up the prospects of South Korea, Stephanie Hui, head of merchant banking for Goldman Sachs in Asia ex-Japan, stressed that China remains her firm's top priority. Goldman, which has 1,500 people in Hong Kong and a further 500 in Beijing and Shanghai, sees considerable investment potential emanating from next-generation entrepreneurs - Chinese who complete their tertiary education overseas and then return home to set up businesses.

"In 1995 there were only 10 China-focused private equity funds; today there are more than 5,500, including renminbi and US dollar funds," Hui said. "It's very competitive but if you are patient you can still find good deals."

Not everyone is so easily placated on the impact of China's hyper-competitive investment environment. John Brakey, head of private equity at Australian LP MLC, suggested that the sheer volume of capital entering the country has diluted returns for all investors.

"China and India are interesting markets but when you look at Japan, with only $2 billion raised in the last few years for a market of that size, it seems to be a better environment than the others," Brakey said.

This doesn't indicate an unwillingness to invest in Asia, rather a more nuanced view of the merits of individual markets. This is likely to be reflected in international LPs' future allocations to the region.

"This might be one of the last panels that talks about Asia as Asia - people will increasingly make allocations to individual markets," said Juan Delgado-Moreira, managing director and head of international at Hamilton Lane. "The world is OECD-centric but the opportunities are going to change because of growth in Asia."

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• Topics
• Greater China
• Investments
• LPs
• GPs
• Asia
• China
• LPs
• GPs
• The Carlyle Group
• Goldman Sachs
• MLC Private Equity
• Hamilton Lane