Asian market trends:
Insights from leading investors

Learn what experts had to say about private markets during our industry gathering in Singapore

On the Chinese market

We have said that we are stepping back from doing minority growth deals in China – and this has been an area that drove our returns for about 20 years. China minority growth investing has been very lucrative in years past and by stepping away from this, we are stepping away from both deal flow and AUM. However, as investors we need to be keenly aware of key macro trends, and as countries enter developed status, it’s natural that private equity opportunities will move towards control buyout. That is the case with China today, where our focus is solely on buyouts. As the country slows down and the market becomes much more mature, China will clearly develop into an important buyout market. However, you’ve got thousands of GPs in China that have traditionally done growth – will they make the transition to buyout? Some will do very well; others will have a hard time.

H. Chin Chou, CEO, Morgan Stanley Private Equity Asia

On the coming correction

The market in 2021 wasn’t healthy for either GPs or LPs. I am glad we are now seeing a reset, but it will be a long and slow recovery. We will see a consolidation among funds and firms will need to demonstrate to LPs how they are differentiated – what do they stand for? And how will they help their portfolio companies?

Philipp von dem Knesebeck, Managing Partner, Blue Future Partners

On access to the right co-investments

When looking at co-investments, LPs need to look at what they are trying to achieve. Are they being opportunistic? Or are they building a portfolio? If the latter, it’s not just the quality of the company that matters, but also whether it fits with a broader portfolio of direct investments. LPs need to be intentional – this helps with access because if they can articulate to GPs what they are looking for, GPs will show them more opportunities.

Jose Fernandez, Partner and Co-COO, StepStone Group

On the use of technology in infrastructure

Infrastructure investors often de-prioritise technology, but it can help you become the most cost-effective player in the market. You can map out a piece of land using drones, secure cheaper solar panel production using an eBay-like auction process or run a transport network better. You can use technology to become more user-friendly when communicating with portfolio companies. Many businesses today are technology-first and so infrastructure investors need to adopt technologies or be left behind.

Rohit Anand, Head of Infrastructure Equity, British International Investment

On private debt in Asia

Private credit is not just one strategy – you have direct lending, special situations and so on. You can use different strategies for the various markets we see across Asia, each with their own characteristics. Asia as a region demonstrates strong economic growth. LPs come to Asia for private credit opportunities not just for diversification, but also for the long-term return premium. And there is a key difference here from the US and Europe. Companies here are used to high interest rate environments and are therefore less likely to become stressed by this. We are also seeing a lot more high-quality businesses in Asia look to private credit for funding. There are some very interesting opportunities here.

Celia Yan, Head of APAC Private Credit, BlackRock

On past exuberance

We have to remember that many deals in Asia involve minority stakes and so they don’t have control over the situation. You’ll have other parties who may have rights and so that may limit what you can do. You may also have other investors, including family members and other original owners of the business, and so you have to be very clear if you’re considering a GP-led deal. Most of all, you need to have a clear view of how you will ultimately get liquidity – you can’t put it into yet another continuation vehicle and at some point it has to stop and LPs need to get their capital back.

Michael Marquardt, Regional CEO, Asia, IQ-EQ