PE recruitment: The churn

"Private equity has turned into major league baseball," one LP observes, referencing the string of high-profile recruitments the industry has seen recently in Asia. Much of this activity has involved KKR; it is not the only pan-regional player to see some degree of churn, but the seniority of the people involved inevitably draws attention.

First it emerged that Ashish Shastry, managing partner at Indonesia-focused Northstar Group, would join the firm later this year as head of Southeast Asia, a role he previously held at a similar but more limited role at TPG Capital. Then it was announced that David Liu, KKR's co-head of Asia private equity and head of China, and Julian Wolhardt, regional leader of China, would leave the firm at the end of this year to raise a China-focused fund.

Meanwhile, Zhen Ji was hired from CITIC Capital to join the China team as a managing director and Hyoung Seok Lim, formerly of McKinsey & Company, came in as a managing director in Korea. The most recent revelation is the appointment of Paul Yang, currently chairman of China Development Financial, as the new head of China.

To a certain extent, this round of musical chairs is not surprising. KKR is preparing to launch its third Asian fund and this inevitably involves the managing partner confirming that his senior executives are willing and able to stay on for at least another investment cycle. Liu and Wolhardt worked together as "company men" at Morgan Stanley Private Equity Asia (MSPEA) for eight years and have put in another 10 years at KKR. If they don't spin out now, when would it happen?

It should be noted that replacing some executives and making additional hires in areas of perceived weakness was also a feature of Asian private equity before the global players launched their previous regional funds in 2011-2012. Back then TPG was the story, with Weijian Shan and May Ma departing for PAG and Boyu Capital, respectively. The turnover was one, but not the only, factor in a difficult subsequent fundraise.

There may still be people moves to come before the private placement memorandums are issued, but several other firms have already seen some changes since the start of the year.

At The Carlyle Group, Eric Zhang left to become head of China for General Atlantic, while David Bluff was promoted to lead the Australia and New Zealand buyout team. TPG saw former Greater China co-chairman Sing Wang leave for China Minsheng Financial Holdings and brought in Sanghoon Lee from MSPEA and Joel Thickens from CHAMP Private Equity to head up operations in Korea and Australia, respectively. CVC Capital Partners has also been on the hiring trail, with Yi Luo joining from The Blackstone Group as head of China and ex-Unitas Capital CIO Eugene Suh becoming Asia COO.

The Australia angle is an interesting one. Over the course of 2015, the actual or impending departures of the country heads of KKR, TPG and Carlyle were announced - three executives with an aggregate tenure of 37 years. Asked about the significance of the timing, one industry participant notes that 10-12 years is a natural length of time to spend with a pan-regional firm: a combination of the travel (particularly for those with Asia-wide responsibilities) and answering to investment committees in different time zones becomes trying after a while.

Seasoned executives may also have sufficient track record on which to start their own firms; of the Australia three, TPG's Ben Gray and Carlyle's Simon Moore are both said to be preparing fundraises. If we are to see a succession of spin-outs, the question then becomes how many will be successful. Historically, few have managed to break through - although it remains to be seen whether foreign LPs' growing familiarity with Asia and the emergence of more capital providers within the region change that.

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• Topics
• People
• GPs
• Appointments
• KKR
• The Carlyle Group
• TPG Capital
• CVC Capital Partners