Pension funds still committed to pan-Asian, global funds
Institutional limited partners are becoming more nuanced in their appreciation of private equity opportunities in the region but this doesn’t necessarily signal a wholesale shift away from pan-Asian or global funds.
"We are trying to put $1-1.1 billion a year and so it doesn't make sense to allocate $20 million to a relatively small, country-focused fund," said Charles Carpenter, managing director of the State of Wisconsin Investment Board (SWIB), speaking at the AVCJ PE Leaders' Summit in Hong Kong yesterday.
Carpenter added that SWIB, which has about $75 billion in assets under management, normally gets its Asian exposure through global funds operated by the likes of The Carlyle Group, TPG Capital and Providence Equity Partners.
His sentiments were echoed by Richard Hall, managing director of private markets at the Teachers Retirement System of Texas, which has more than $107 billion under management and recently upped its private equity allocation from 10% to 12%. Hall said that direct investments in GPs - as opposed to taking the fund-of-funds route - didn't make sense if a commitment was less than $100 million.
Referring to fund size and strategy, Monte Brem, CEO of gatekeeper Stepstone Group, noted: "GPs sometimes lose sight of the fact that they are a piece of a large puzzle. What they are doing might work well for them, but it might not work for the LPs."
Speaking on another panel, Mounir Guen, CEO of placement agent MVision, said it was time GPs showed more humility in their dealings with LPs. "Pension funds have to cringe when GPs are flying in on private jets and pulling up in limousines," he said. "They are looking for someone with whom they can develop trust."
The PE Leaders' Summit and Limited Partner Summit, both of which took place on Tuesday, form part of the AVCJ Forum 2011 and Private Equity Week - Asia. It continues today with the Investment Summit. For more information, please visit http://www.avcjforum.com. You can also follow events as they unfold via Twitter @AVCJ (hashtag #avcj and #avcjforum).
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