He said, she said: A year in quotes

THE IMPACT OF ABENOMICS ON PE:

"Private equity has been in Japan since 1987 and we have seen the ups and down of many administrations. But I will go out on a limb and say that this is best chance I have ever seen for Japan" - Anthony Miller, PAG

"I would say it is better to describe the third arrow as a thousand needles of reform that need to be implemented and introduced. Some of those needles are working very well but some still need to be redefined" - Hiro Hirano, KKR

"The typical explanation for this is Abenomics; businesses are doing well and the weakening of then yen means now is the right time to sell the divisions, but I don't agree. Actually, corporations now have a more urgent sense of crisis as they know they cannot depend on Abenomics, alone. They feel they have to be strategically prepared now and that is the new psychology among the management we are seeing now" - Masamichi Yoshizawa, Longreach Group

THE IMPORTANCE OF LOCAL EMPOWERMENT:

"We are all about shoe leather in the street, identifying deals, and trying to preempt processes. I think that is different to the basis on which most buyout big buyouts do deals - which is often through connection at very senior levels of government and business, and good relations with investment banks" - Rodney Muse, Navis Capital Partners

"There is one simple rule: it can only work in Asia if your investment committee, your deal team and your actual decision-makers eat, sleep, and wake up in an Asian time zone. If you are waking up at and presenting your case to a New York-based team at midnight - you are not going to be a competitive player in Asia" - Rob Petty, Clearwater Capital Partners

EXPANSION NOT COMING AT THE EXPENSE OF CORE VALUES:

"KKR's founders have taken what was once a single product in a single market and successfully created a multi-strategy product on a global scale. It all comes back to a strong culture that the founders have instilled within the firm. We have expanded into different markets but we keep our DNA" - Ming Lu, KKR

"You can industrialize alpha but we cannot be all things to all people. What is the culture that is right for this organization? You cannot have a strong, centralized structure and strong regional decision making. You can have a system to empower people at local level or have a centrally controlled system that allows people to execute at local level" - Guy Hands, Terra Firma

CHASING GROWTH:

"If you find yourself looking at GDP growth data or long-term exchange rates, trying to find where PE will be successful you are looking at the wrong data sets. You need to get down into the detail of what the manager is doing" - Tim Sims, Pacific Equity Partners

"You aren't trying to find the unique growth industry. The more interesting, exciting and exotic sector the more money is thrown at it. Where there is high growth there are high prices" - Jim Hildebrandt, Bain Capital

"It's not unusual that nowadays in PE there is no such thing as an inexpensive investment. In most markets there is an oversupply of capital" - Charles Huh, CVC Capital Partners

VALUATION BUBBLES IN THE TECHN SPACE:

"The bubble analogy does not do justice to the market we are in right now - that oversimplifies things because something is changing and something is happening in the market from a valuation perspective. The competitive opportunity and the market opportunity are now so great that companies are raising more capital earlier on in their life-cycle than they were to take advantage of these opportunities" - Scott Kupor, Andreessen Horowitz

"Companies are raising more money than they need, which is encouraging negative behavior. Also, companies that shouldn't get funded are getting funded, particularly with copycat start-ups, which places an even greater burden on good companies" - David Yuan, Redpoint Ventures

"If you bet on a first mover, give them a lot of money and let them run as fast as they can, then they will become a huge company. If that happens, it doesn't matter what price you pay, you will make a lot of money. In Chinese we say, ‘If the typhoon comes, the pigs can fly.' It is very important to do all your work and make sure this is the right pig" - Kathy Xu, Capital Today Group

CONTROL DEALS IN INDIA:

"The lessons we have learned from our earlier funds is that we have to be in control of our destiny. We are seeing enough traction for buyout deals and believe being in control and having more avenues for exits is the right way. That is why our focus will be on doing more buyouts" - Prateek Dhawan, Everstone Capital

"Where there is an ability to delist companies that will be the single biggest source of control transactions. Because the alternative is take control of companies where there are succession issues and that is a question of making sure you know who you are backing - this is not a market that is full of people who have been backed before and it is not a market that is replete with corporate carve-outs" - Gautham Radhakrishnan, Tata Opportunities Fund

TAIWAN'S UNCERTAIN ATTITUDE TOWARDS PE BUYOUTS:

"At a time when private equity has become one of the most active channels for capital investment and transferring expertise worldwide, Taiwan has attracted a little private equity in recent years. In an increasingly integrated regional and global marketplace, Taiwan simply can't afford not to have private equity investment" - Kurt Tong, Bureau of Economic and Business Affairs, US Department of State

"I know some of you are very concerned about some [processing] cases. But we will make some changes so the processes become more transparent and predictable - like today's weather, it's very blue" - Tien-Mu Huang, Taiwan's Financial Supervisory Commission

SILVER LAKE'S INVESTMENT IN ALIBABA GROUP:

"Alibaba was at the far end of an extreme for us format-wise. I remember one of my colleagues on the investment committee saying, ‘So your base case is an IPO with a $100 billion valuation. How many times has that happened before?' At the time the answer was zero. It seems quite conservative now" - Ken Hao, Silver Lake

"The transaction was unusual. To have Silver Lake come in and say we have kicked the tires and looked under the hood and it's a good company - that was a great validation of the company" - Joe Tsai, Alibaba Group

LPS OWNING STAKES IN GPS:

"We strongly believe the GP should be independent. While it might be interesting for us, it will change the level of a GP's independence down the road; things change, markets change, and they might want to do something not that is suitable going forward" - Ivan A. Vercoutere, LGT Capital Partners

"For us the difference is our accountability to the board and to our stakeholders, so while GP independence sounds good, it just doesn't really cut it for us and I am not sure what it gives us," he said. "From our perspective, accountability to our partners - peer institutions and GPs who align their objectives with ours - really works" - Jacques Demers, OMERS

OVERVALUED REAL ASSETS IN DEVELOPED MARKETS:

"If you look around the world you see people paying ridiculous prices which give the impression that there is too much capital chasing too few deals - Australia is a case in point. The reality is that 80% of the capital going into real assets is chasing 20% of the deals and it's the low-hanging fruit" - Niel Thassim, Brookfield Asset Management

"The most interesting opportunities for us at the moment are in emerging markets because the deal flow in the developed world does not make sense to us from a pricing perspective" - Natalie Meyenn, MLC Investment Management

CHINA TECH START-UPS ACCEPTING STRATEGIC CAPITAL:

"I tell portfolio company founders: ‘Unless you're in a critical moment and need a large amount of cash, don't go for strategic capital. Raising venture capital keeps you more independent and so you can cooperate with every strategic investor.' If a founder decides to partner with one of them, he should make sure the buyer has a clear strategic angle and that the assets are quantified and written into a legal document" - J.P. Gan, Qiming Venture Partners

"In the domestic market, companies and VC backers are more than happy to sell to Baidu, Alibaba or Tencent because it is like an endorsement from a king, bringing them into his kingdom. But of course sometimes it ends up going to the hell" - Alex Zhang, Shenzhen Cowin Venture Capital

AUSTRALIAN LPS AND CO-INVESTMENT:

"It is an issue of compensation, remuneration and the ability to retain staff. People are in-sourcing but no one is saying, ‘How do we compensate and get alignment across our internal teams so that we get the same outcome as if we were outsourcing?' It is about more than just saving five basis points in costs" - Michael Lukin, ROC Partners

"Once you build an internal team it is very difficult to stop investing in that area. If a GP underperforms we are not there in the next fundraise, but if you have built an internal team what are you going to do?" - David Simons, Future Fund

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