Affinity named firm of the year at AVCJ Awards

The $5.7 billion sale of Oriental Brewery (OB) to Anheuser-Busch InBev also secured large cap exit of the year prize for the Affinity and co-investor KKR, while the two firms won the Operational Value Add Award for transformative work undertaken during the holding period.

A total of 14 awards were presented in a competition enlarged to better recognize mid-cap and venture capital activity. The roll of honor includes CVC Capital Partners and CDH Investments in the large-cap space, with the likes of Advantage Partners and Quadrant Private Equity scooping prizes in the mid-cap categories, and Qiming Venture Partners and GGV Capital among the VC winners.

Victor Chu, chairman of First Eastern Investment Group, was also on hand to collect the AVCJ Special Achievement Award in acknowledgment of his place among the pioneers of private equity in Asia.

Affinity announced a final close of $3.8 billion on its fourth pan-regional fund earlier in the year after agreeing with LPs to raise the hard cap from $3.5 billion. Over the 12 months ended September, the PE firm invested in a dairy farming joint venture with China's Sunlon, bought a stake in Virgin Australia's frequent flier business, and backed poultry producer Leong Hup International in its debut Malaysia deal.

Accepting the Firm of the Year Award, K.Y. Tang, chairman of Affinity, looked back to the beginnings of his career as a buyout investor 17 years ago. He paid tribute to his colleagues at Affinity and the industry as a whole for riding out the initial market skepticism and the various cycles that followed to achieve what it has today.

"When we started we had very modest ambitions," Tang said. "We never thought the buyout business would grow to this size in Asia, so our success is also a testament to the whole industry and everyone who works in it."

OB, which Affinity and KKR bought from AB InBev for $1.8 billion in 2009 and then sold back to the previous owner for a 5x return, has inevitably drawn a lot of attention. Over the five-year holding period, OB went from being the number two player in South Korea's beer market to the clear leader, with top-line revenue and EBITDA increased 80% and 108%, respectively.

"What we did particularly well across KKR and Affinity was really enable the management to pursue that effort, first by identifying and prioritizing attractive growth opportunities and then really working closely day-to-day to really implement those strategies," said Stephen Ko, a director at KKR. He collected the Operational Value Add Award with Y.T. Park and C.J. Lee, managing partner and partner, respectively, at Affinity.

CVC Capital Partners triumphed in the large cap fundraising category after taking just under a year to raise $3.5 billion for its fourth pan-Asian fund. Quadrant Private Equity, which collected $770 million for its seventh Australia and New Zealand vehicle in a fraction of the time, won mid-cap fundraise, with Qiming Venture Partners taking the honors in the venture capital category.

Multiple firms enjoyed a share of the spoils in the venture capital deal and IPO exit categories, reflecting the now sizeable nature of the portfolio companies concerned.

Indian e-commerce giant Flipkart raised $1 billion from investors in July, with classic late-stage players such as DST Advisors featuring alongside Accel Partners and Tiger Global, two of the company's earliest backers. Meanwhile, the big PE winners in Alibaba Group's record-breaking $25 billion IPO included Silver Lake, China Investment Corp, Yunfeng Capital, CITIC Capital and Boyu Capital.

CDH Investments claimed the large cap deal prize for Nanfu Battery, a carve-out from Procter & Gamble, while the mid-cap award went to another China deal - FountainVest Partners and China Media Capital's purchase of a minority stake in IMAX China. Mid-cap exit went in the direction of Japan as Advantage Partners overcame a competitive field with the 9.9x return it secured on United Cinemas.

Richard Folsom, representative partner at Advantage Partners, noted that Japan has lived in the shadow of other markets in Asia and as such deals generally don't get a huge amount of visibility. "Part of that is due to the fact that Japan in terms of market size and deal size has not met expectations in many ways relative to the size of the economy, but there are great deals like United Cinemas happening in the mid-market space," he said.

Three awards were presented honoring the achievements of specific individuals. Jixun Foo, China-based managing partner at GGV Capital, was named VC Capital Professional of the Year, both for his activities as an investor and his role in raising the firm's $622 million fifth fund. For the first time, two individuals from one firm - KKR's David Liu and Julian J. Wolhardt - shared the PE professional of the year prize. KKR has committed more than $1.3 billion across five China deals in the past 12 months.

The final word of the evening went to First Eastern's Chu as he collected the AVCJ Special Achievement Award. Chu observed that the private equity industry has been largely misunderstood by the market as creating more value for itself than for society. He proposed a three-pronged strategy for remedying this.

"Firstly, encourage media partners such as AVCJ to articulate the societal value creation of the private equity industry. I don't think this is well understood by the market or the population at large," Chu said. "Secondly, I think we should be seen and do more in terms incorporating the social value creation and the social impact into our value matrix. When we look at projects we look at the sustainability and the social side as well as the monetary side. Lastly, I think in training our younger colleagues we have to instill in them the importance of social responsibility. After all, doing good is good business."

The AVCJ Awards were held on the eve of the 2014 AVCJ Forum, which is being held in Hong Kong from November 11-13. For more information, please  go to http://www.avcjforum.com.

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