Commitment to markets

While, I don't necessarily agree with his take on this particular situation, given that most companies in Taiwan are too small for major private equity firms to justify an investment into (however, they would make great bolt on additions to Mainland China portfolio companies), his point does make one think of the value of commitment and the value of commitment to a particular market.

I still remember the days when private equity firms covered Asia from their home bases in New York or London. Needless to say that wasn't such a productive time, but then Asia wasn't really open for business. The situation changed after the Asian financial crisis hit in 1997. Investors and advisers begin to flock into Asia especially in the two countries most heavily hit, namely South Korea and Thailand, respectively setting up camp in the Shilla and Regent hotels.

Those that invested on Korean companies obviously did better than those bet on Thai enterprises. While fundamentals aside, all firms that profited from their Korean deals, Affinity, CVC, Unitas, Carlyle, all had Seoul offices and were actively committed to making themselves part of the local market. Meanwhile, outside of Singapore (and recently Jakarta, Indonesia), few pan-Asian firms have offices in Southeast Asia. It is obvious that the offices may not the be only reasons that the investments were successful but the commitment to a local office run by local professionals definitely played a part in the Korea-focused firm's success in future deals.

There is only one possible exception to the deal, which is Japan, which has been a very difficult market for overseas investors. The venture firms that have set offices in the early 2000s have largely failed and most buyout firms have left the country after failing to find enough deals to justify an office. 3i, one of the earliest entrants to the Japanese buyout market, left in 2003 citing lack of deals.

However, commitment and dedication has proven to be fruitful for those that have persevered such as TPG, Olympus, Carlyle and KKR. Particularly worth mentioning here is the Longreach Group, which announced a first close at $125 million, which will continue to invest in the Japanese market. Unlike his peers in the industry, who are flying executives to Hong Kong and other regional offices, Mark Chiba is staying tight and scouring for deals from his office in Tokyo. That is commitment.

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• Topics
• Greater China
• North Asia
• TPG Capital
• Affinity Equity Partners
• The Carlyle Group
• CVC Capital Partners
• KKR
• Olympus Capital Holdings Asia
• Unitas Capital