The Asian office: Regional, local or both?

But it seems that most GPs have become sufficiently familiar with Asia to realize that there isn’t much of a debate – it falls down to logistics and focus.

In the past, the choice for the one Asian office is usually between Hong Kong and Singapore. Those that opted for Hong Kong did so because of, amongst other advantages, its proximity to the major markets of Greater China and North Asia. The Singapore faction tended to be either primarily interested in the Southeast Asian and Indian markets or keen to have easy access to many of the region’s most established LPs such as GIC and Temasek.

The Hong Kong vs. Singapore question is probably only relevant for the larger buyout firms that get a large part of their deal flow from sell-side bankers as neither city – despite their popular IPO markets – have shown little activity in terms of investments. For venture firms and those focused on minority stakes, it is difficult to compete with country-specific firms with an on-the-ground presence and local networks.
Now we see that even the larger firms are setting up offices in countries with strong activity such as Australia, India, China, Japan and, most recently, Indonesia.

For LPs, in particular fund-of-funds, the realities have traditionally been somewhat different. Most of these players are visited by funds seeking to raise capital so there is no real need for more than one office, although professionals can expect to spend plenty of time living out of hotel rooms as they conduct due diligence. Perhaps this is now changing as we see some fund-of-funds – notably HarbourVest in Japan and Partners Group in South Korea – branch out into countries where they feel the competitive landscape requires closer relations with GPs.

As the Asian private equity industry continues to evolve, the question of where to establish a regional headquarters is blurring. A number of exceptional firms like Navis Capital and MBK Partners – run out of Kuala Lumpur and Seoul, respectively – have shown that regional private equity can be successfully conducted from elsewhere in Asia. 
That said, both Navis and MBK are also prime examples of the hub-and-spoke model: They cultivate local networks out of offices in other parts of Asia while senior partners lead the fund with a regional perspective.

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• Topics
• LPs
• Temasek Holdings
• HarbourVest Partners
• MBK Partners
• Navis Management