For starters

Tracking the trends of Asia private equity industry

A good month for…


China’s regulatory bodies expanded the RMB Qualified Foreign Institutional Investors (RQFII) programme by permitting qualified investors to invest RMB-based funds raised in Hong Kong in the mainland securities market. This concerns public market mechanisms – for now. The takeaway is it’s yet another step toward internationalisation of the currency.

On the fundraising side, TPG Capital held a first close on its two RMB funds, which were launched in 2010. The funds now hold RMB4 billion (€484 million; $634 million), which makes up an aggregate 40 percent of their RMB10 billion combined target. 

The two funds, located in Shanghai and Chongqing, garnered 90 percent of commitments from private investors, according to the firm.

On another front, HSBC has just bolstered its RMB dealings by hiring Paul Gooding to lead the cultivation of London as an international hub for the Chinese currency. Gooding, who headed the bank’s European credit trading for the last seven years, will work in conjunction with public sector officials, fellow banks and the larger HSBC network in building London as the Western gateway to a rapidly ascending Asia.

Last month, UK Chancellor of the Exchequer George Osborne unveiled plans to promote closer collaboration between London and Hong Kong, which has already established itself as the premier financial centre for the Asian time zone.

Looks like the UK is re-investing itself in its former colony after a full exit in 1997.

A bad month for…


Valentine’s Day came and went unnoticed for Asian GPs. According to a survey by the Emerging Markets Private Equity Association, most Asian LPs favour Western private equity managers. In fact, 77 percent of respondents, made up of 13 prominent Asian institutional investors, consider North America the most appealing private equity market.

Lack of quality fund managers in the region is the main reason making investors reluctant to put their money into funds. The survey revealed that most LPs wait and watch regional fund managers to ensure they gain certain levels of local experience in countries before deciding to commit capital.

GPs have also come under fire this month for offering empty promises of unique value add. At the HKVCA’s Asia Private Equity conference in Hong Kong, discussions questioned the commonly-used expression of fund managers “adding value”.

“I’ve lost count of the number of GPs around the world who talk about value added and we know how much bs that really is,” said David Fitzgerald, chief investment officer for private equity at Emirates Investment Authority, at the conference. 

“Value added actually equals sitting on the board and talking to the management team, maybe spending time with the finance director. That’s fundamentally not really value added.”

GPs jumped to their own defence, however, providing several concrete examples of how they assist firms in making operational changes.

LP scepticism could be only one symptom of the larger, ongoing and lengthy process involving LPs redefining their relationships with GPs. No doubt LPs are also influenced by the building controversy in the US surrounding what private equity firms do and whether their rewards are fair. The temperature will continue to rise – the presidential election is not until November.