The 2008 Global Private Equity Awards

For the ninth successive year we are proud to recognise the best of breed in global private equity. The outcomes you will find on the following pages are the result of an extensive – and entirely democratic – voting process which once again produced an overwhelming number of responses. As always, the awards acknowledge the ever-increasing span and diversity of private equity in Asia.

This time around, the voting took place in a changed world. As our readers selected their favourites towards the end of 2008 and in the early weeks of 2009, the chastening experiences of the prior 12 months were still fresh memories. And what memories they were: as the credit crunch extended its grip into the East, the decoupling theory was proved a myth.

The private equity world changed the world over: debt vanished into the ether, financial engineering ceased its modernday revival and became once more a byword for past excesses, and reporting to investors was no longer just a routine back office function.

So who came out on top in the many and varied categories for which we sought the verdict of you, the readers? On the following pages you will find a list of all the Asian winners. The editorial team at PEI Media has turned its thoughts to why a particular firm or deal picked up the gold medal in each category. The awards process was once again fascinating and the results have produced some talking points. Without further ado, please read on.

ASIAN LBO FIRM OF THE YEAR
1. Affinity Equity Partners

2. Carlyle Japan

3. KKR Asia

Like buyout markets everywhere, the Asian LBO market has stalled as the economic crisis moved banks to close their doors to new lending. With debt financing unforthcoming, the success of a buyout firm cannot be judged on its deal-doing, but might instead be assessed in terms of how it positions itself in a time of crisis.

Affinity Equity Partners, which has already ridden out two recessions, has been scaling down investment since 2007, and in fact, has not made a single investment in the past 12 months. This despite the fact it closed its largest fund to date, the $2.8 billion Affinity Asia Equity Fund III, at the start of 2007.

In 2008, Affinity embarked on a series of exits, the most notable – and successful – of which were the sale of Korean Himart Company to Eugene Corporation for $2.1 billion (see Asian exit of the year) and the sale of auto-parts business Mando to Halla Engineering and Construction.

Affinity is sitting out the worst of the crisis with a pared down portfolio and a wealth of dry powder when many of its competitors are devoting all of their time to portfolio management. KY Tang remains at the helm. He attributes the firm's success to its remaining focused and disciplined; working out of one fund at a time and sticking to the same tried and tested strategy.

ASIAN MID-MARKET FIRM OF THE YEAR
1. HSBC Private Equity (Asia)

2. CDH Investments

3. Hony Capital

South Korea and private equity don't always seem entirely harmonious given the rigour with which the tax authorities have pursued some GPs operating in the country. But Hong Kong-based HSBC Private Equity (Asia) seems happy to challenge assumptions. When 40 percent of its fifth fund was invested in South Korea, a source in the market said: “Everybody left Korea. That's why they stayed there.”

But investors wouldn't support a GP just because of its contrarianism, and, when HSBC (Asia) wrapped up its sixth fund on $1.47 billion towards the end of last year, it was clear that a big vote of confidence in the firm's ability to out-perform had just been delivered. The fund's target was $1.25 billion and the prior fund, which closed in 2004, had collected $700 million.

The firm immediately set about deploying the capital: backing the likes of Chinese supermarket chain YongHui Group and Chinese silicon maker Jaco Solaris.

ASIAN VC FIRM OF THE YEAR
1. SAIF Partners

2. Intel Capital

3. IDG Capital

Since its modest beginnings in 2001 as part of Japanese media and telecommunications company Softbank Corporation, the team at SAIF Partners has firmly established itself as one of the standout names in the growth and venture space in Asia.

Having already made over 100 investments in China, SAIF Partners this year moved into renminbi-denominated fund territory, reportedly closing a RMB1.6 billion fund at the end of 2008 and taking its assets under management to $2.2 billion across three funds.

As growth in most of the world stagnates and the attention of private equity investors hones in on Asia's growth regions, SAIF Partners looks to be in the sweet spot with its investment remit of consumer products and services, TMT, financial services, healthcare, travel and tourism, and manufacturing companies in China, India, Hong Kong and Taiwan.

AFRICAN PRIVATE EQUITY FIRM OF THE YEAR
1. Actis

2. Emerging Capital Partners

3. Brait

Following up on its success last year, global emerging markets investor Actis was once again voted the number one private equity firm in Africa. In this exciting but still embryonic region for private equity investment, it's rare to find a GP with a large team on the ground and a track record of successful long-term partnerships with local companies: Actis boasts both of these attributes.

In an extremely busy year for the firm, in which it was highly active across the region, there were two standout developments. One was a fund: a new $2.9 billion vehicle raised for investment in emerging markets, including Africa. The other was a deal: the $700 million acquisition of major electrical engineering group Alstom South Africa by an Actis-led consortium that also included Old Mutual Investment Group and Black Economic Empowerment partners.

LATIN AMERICAN FIRM OF THE YEAR
1. Advent International

2. GP Investimentos

3. Patria Investimentos

The Latin American franchise led by co-heads Ernest Bachrach and Juan Carlos Torres is undoubtedly a strong plus point for global private equity firm Advent International. The operation was launched in 1996 and has since invested in 35 countries in the region from its offices in Mexico City, Sao Paolo and Buenos Aires. Since the middle of 2007, it has been investing its latest pan-regional fund, LAPEF IV, which raised $1.3 billion.

Last year, Advent continued to add to its stable of Latin American investments by backing the likes of Quero-Quero, the largest home improvement retailer in the South of Brazil, and Frango Assado, the Brazilian restaurant chain. It also completed its first deal in the Dominican Republic with the buyout of Aeopuertos Dominicanos Siglo, the republic's largest airport group.

BEST PRIVATE EQUITY FIRM IN AUSTRALIA
1. CHAMP Private Equity

2. Pacific Equity Partners

3. Ironbridge

2008 was a momentous year for Australian private equity pioneers Bill Ferris and Joe Skyrzynski as the founding partners of CHAMP Private Equity were awarded the first Australian Venture Capital Association (AVCAL) Lifetime Contribution to the Industry award last September. The duo's track record goes back much further than 2000, but it was in that year that they formed a partnership with New York buyout firm Castle Harlan to form CHAMP.

The rest, as they say, is history. CHAMP has become a mainstay of the Australian private equity scene with its activities embracing early-stage, expansion, mid-market and larger buyouts. When pressed, rival investors in Australia concede that CHAMP has tended to time the market well and is always cautious when prices look excessive. In 2008 it evidently had confidence that value could be identified, investing in a number of businesses including mining and civil infrastructure firm Golding Contractors and equipment finance company Alleasing.

BEST PRIVATE EQUITY FIRM IN CHINA
1. CDH Investments

2. CMIA Capital Partners

3. Hony Capital

As the Chinese government swings behind the private equity industry, more and more GPs are either springing up on the mainland or launching themselves into the fray.

There is, however, a clear front row of players: those that have been on the ground since the early days and whose track record proves they have the right kind of connections and know-how to succeed in what is still a very tricky, opaque market.

Among this select group, the three shortlisted firms above stand out as being as “establishment” as a firm can be in what is still a youthful market.

In fact, CDH Investments, along with third-placed Hony Capital, reportedly received the ultimate establishment nod this year in being named among the firms slated to receive commitments from China's biggest pension fund, the $74 billion National Social Security Fund, in its first-ever allocation to private equity.

BEST PRIVATE EQUITY FIRM IN INDIA
1. ICICI Venture

2. Avigo Capital Partners

3. India Value Fund

When the year began, expectations at ICICI Venture, one of India's oldest private equity managers, could not have been higher. After all, in December 2007, when the firm lured back senior professional Jayanta Banerjee after a six-month spell at Lehman Brothers India, it was revealed that ICICI had plans to grow assets under management from $2.5 billion to $10 billion over the following three years.

According our voters, ICICI has been making good progress. Under the leadership of managing director and chief executive Renuka Ramnath, the firm enjoyed a busy 2008 – and one in which healthcare was clearly high on the priority list. It invested in the likes of RG Stone, a specialist urology hospital, and Sahyadri, a hospital network. It also reached into the Italian market to acquire Metalcastello, an Italian gear maker, alongside Indian automotive firm Mahindra & Mahindra.

BEST PRIVATE EQUITY FIRM IN JAPAN
1. Carlyle Japan

2. Advantage Partners

3. Mizuho Capital

Washington DC-based private equity giant Carlyle Group has long been praised for its Japan franchise. In a market that is not easy for foreign firms to penetrate effectively, it has invested consistently over a long period of time and won the trust of the Japanese corporate world along the way.

This was once again evident in 2008 when it bought NH Techno Glass, a manufacturer of glass substrates for liquid crystal display (LCD) glass. NH Techno was a joint venture between Japanese companies HOYA Corporation and Nippon Sheet Glass. While the deal saw Nippon sell its entire stake, HOYA retained an interest and said it would work with Carlyle in a partnership designed to ready the company for a possible IPO.

BEST LAW FIRM (FUND FORMATION) IN ASIA
1. Debevoise

2. Clifford Chance

3. Simpson Thacher & Bartlett

The outlook for private equity fundraising anywhere in the world is not particularly rosy right now, but with Asia remaining high on LPs' priorities, 2009 could still see some large fund closes in the region.

In fact, sources inform that PEI winner Debevoise, steered in Asia by Hong Kong-based managing partner Andrew Ostrognai, is currently working on several large fund raises.

Since opening its Hong Kong office in 1994, the US law firm has carved a niche for itself to rank alongside the strong reputation of the New York practice.

A top priority for GPs at the moment is the risk of LP default. This in turn is said to be one of the top priorities for law firms like Debevoise as they work to build watertight clauses into new limited partnership agreements protecting GPs from this eventuality. Staying one step ahead of potential GP pitfalls is what helps a law firm like Debevoise stay top of its game.

BEST LAW FIRM (DEALS) IN ASIA
1. Allen & Gledhill

2. Paul Hastings

3. Clifford Chance

As private equity establishes itself further in Asia and local firms hone their expertise, we are seeing an increased focus on the “local” above the international.

That Singapore's largest law firm, Allen & Gledhill, should win the award for best law firm (deals) in 2008 fits the trend. Established in 1902, the firm has grown from a colonial-era partnership of two, to region-wide prominence and a staff of over 250 lawyers, including an active private equity practice and large M&A team, coheaded by Andrew Lim.

Private equity transactions the firm worked on in 2008 included the S$785 million KKR-backed purchase of Singapore-based Unisteel Technology; the S$295 million acquisition of Seksun Corporation by Citigroup Venture Capital International; and the S$120 million purchase of Sing Lun Holdings by HSBC Private Equity.

BEST DEBT PROVIDER IN ASIA
1. HSBC

2. JPMorgan

3. Standard Chartered

2008 was a year that saw few buyouts and many redundancies from leveraged finance teams in the Asia-Pacific region. As such, voting on a winner for best debt provider in Asia must have been a tough ask. Certainly the readers' pick, HSBC, did not sail through the year unscathed, although it started promisingly.

In May 2008 the bank underwent a restructuring, moving all its loan underwriting and syndication activities into the leveraged finance group, headed by David Simons. The bank hired Aaron Chow, former head of syndicated finance for Asia at UBS, to join the HSBC team as head of event-driven syndication.

However, by November, the bank was announcing 500 job cuts – 450 from its Hong Kong staff and 50 from the rest of Asia. Although most of these were reportedly from the commercial and personal banking teams, they came as an acknowledgement of the bank's struggles as recession was officially announced in Hong Kong.

Most relevant to the leveraged finance team, it was reported in February 2009 that Simons himself had left the bank. He has been replaced by Jeff Bennett, a managing director within the bank's leverage and acquisition finance unit.

BEST M&A ADVISER IN ASIA
1. Goldman Sachs

2. Merrill Lynch

3. Morgan Stanley

For the second year running, Goldman Sachs picked up the top spot in this award, despite it being a much less fertile environment for M&A activity than 2007. By the time the economic crisis really began to bite in Asia, in the second half of 2008, Goldman Sachs had already racked up an impressive list of large Asian (ex-Japan) M&A transactions involving private equity firms.

First came Affinity Equity Partners' $2.1 billion sale of Himart to Eugene Group in January (see Asian exit of the year). Then there was the $1.1 billion sale of a minority stake in TVG Capital Partners and TPG-backed Hanaro Telecom to SK Telecom in March, which was the largest telecom M&A transaction in Korea since 2000.

September saw the acquisition of Italian concrete equipment manufacturer Compagnia Italiana Forme Acciaio (CIFA) by a consortium of investors including Chinese company Zoomlion, Goldman Sachs, Hony Capital and Mandarin Capital Partners. In the same month was the $2.5 billion sale of Warburg Pincus-backed firm Huiyuan Juice Group to Coca-Cola: the first ever sale of a Chinese private sector company through a competitive auction process.

BEST PLACEMENT AGENT IN ASIA
1. Credit Suisse

2. Merrill Lynch

3. MVision

Also winner of the North American award, Credit Suisse wins points for being a truly global placement firm. Currently working on three Asia-domiciled funds, the firm says its business in Asia is as much

about catering for Asian LPs' interests outside Asia as it is about raising funds for investment in the region.

With a base in Tokyo and Australia, frequent visits to Hong Kong and Beijing, and business in the pipeline in India, the strength of the firm's handle on the region is reflected in the winning of this award. As a global entity, Credit Suisse is pretty selective about the funds it chooses to work on – picking around 25 every year from the 450 to 500 that are paraded to it.

Selectivity is a wise move in a tough fundraising climate. It remains to be seen how many successful fund closes 2009 will see. Credit Suisse will of course be hoping to reach target with the three Asia-focused funds it is currently advising: Asia and India-focused Berkeley Energy Asia Fund, which is targeting $250 million; pan-Asian Credit Suisse Private Equity Asia, which is aiming for $750 million; and China Harvest Fund II, which wants $1 billion.

BEST FUND OF FUNDS IN ASIA
1. Squadron Capital

2. Partners Group

3. Asia Alternatives

The rationale for investing through funds of funds in Asia is as compelling as ever. After all, “Asia” is not so much a single market as an expression of geographic convenience which disguises the fact that this is a region of extremely disparate nations and cultures. When it comes to private equity investment, what works in Australia will not necessarily work in Japan; what's perfectly normal in India may be extremely unusual in South Korea. Funds of funds are there to cut through this confusion and make sensible investment decisions on behalf of investors that might struggle if left to their own devices.

Consequently, there has been a rash of Asia-focused funds of funds launched in recent years in response to strong LP demand. Not for the first time, our voters have indicated that Hong Kong-based Squadron Capital, headed by chief executive David Pierce, is in the vanguard. An affiliate of Search, a Hong Kong investment group founded in the mid-1970s, Squadron has long experience of the region and its idiosyncrasies.

BEST LP IN ASIA
1. Temasek

2. GIC

3. Daido Life

Following a two-year stint as runner up to Singapore's other LP behemoth, GIC, Temasek reclaimed the top spot in 2008. While both remain private equity stalwarts, Temasek arguably had a more high-profile year in private equity in 2008, swinging behind two of the region's most successful new fundraises and creating headlines on the direct investment side too.

First up was former Goldman Sachs' executive Fang Fenglei's $2 billion China-focused fund, Hopu Fund, which reportedly received a $1 billion anchor investment from Temasek. Next was FountainVest's $1 billion November fund close on its China-focused first fund, the FountainVest China Growth Capital Fund. FountainVest founder Frank Tang was previously senior managing director of China investments at Temasek and left with colleagues Terry Hu, George Chang and Chenning Zhao to set up on their own. Temasek committed an undisclosed anchor investment.

In terms of direct private equity activity, December saw the sovereign wealth fund sell Singaporean power generation company PowerSeraya to Malaysia's YTL Power International for $3.8 billion. The deal was the third in a string of power company divestments over the year, which included the S$4.2 billion sale of Tuas Power in March and the S$3.7 billion sale of Senoko Power in September.

ASIAN BUYOUT OF THE YEAR
1. Tokyo Star Bank

2. NH Techno Glass

3. Unisteel Technology

Tokyo Star Bank was used to being in private equity hands before being acquired last year by Japan's Advantage Capital in a buyout reported to be worth around $2.4 billion. Advantage, headed by Richard Folsom and Taisuke Sa s anuma , bought some 70 percent of the business from US-based Lone Star Funds.

Lone Star's guidance has been credited with making Tokyo Star more fleet-footed and innovative than many of its rivals in the Japanese banking sector. Hence, Advantage believes it has a good platform from which to grow the business further and exploit opportunities arising from the global credit crisis. Advantage has reportedly earmarked a strategy for Tokyo Star that includes alliances, takeovers, new products and more branches.

ASIAN EXIT OF THE YEAR
1. Himart

2. Maktoob

3. Sriram Transport

Following the travails of various private equity investors in the South Korean market – perhaps most famously those of US fund Lone Star – it is widely assumed that executing successful deals in the country is a near-impossible task. How then do you explain the sale of South Korean electronics retailer Himart by Affinity Equity Partners to Eugene Group in May last year? The transaction delivered Hong Kong-based Affinity an IRR of more than 100 percent and replaced a $200 million equity cheque written two-and-a-half years earlier with one for $2.1 billion.

Nor was that return the result of high leverage: the firm reports that debt finance for the deal was a modest 4x EBITDA. Through a strategy of expanding the product mix, refurbishing existing stores and improving margins, profitability was increased nearly 80 percent during the period of ownership.

The timing of Affinity's sale was also notable. The firm says the offer it accepted was not the highest, but did offer certainty and speed of closing. With hindsight, this was just as well: soon after the deal was signed, Asian stock markets plummeted and the financing market dried up.

ASIAN VC INVESTMENT OF THE YEAR
1. Oak Pacific

2. SE Forge

3. Himin Solar

Amid the surge in venture capital investments in China and India recorded in the second quarter of 2008, the later-stage round for Beijing-based Oak Pacific Interactive, a web 2.0 company, stood out.

At $430 million, the Softbank-led investment comprised well over half the $899 million committed to the information technology sector. Information technology comes under the bracket of information services and media content, which was the most popular sector amongst GPs, garnering 71 percent of total VC spend, according to a study by Dow Jones VentureSource.

As we move into 2009, the focus of GP interest in Asia is increasingly on the growth markets of China and India. While we can expect some GPs to be weeded out by the crisis, it is likely there will still be intense interest in the two countries' VC markets.

BEST MEZZANINE FIRM IN ASIA
1. Asia Mezzanine

2. ICG Asia

3. Kendall Court

Mezzanine finance in support of private equity transactions is still a relatively new phenomenon in Asia, but given the scarcity of financing sources available these days its use should be expected to grow. That will be good news for the pioneers in this sector – among them, Hong Kong-based Asia Mezzanine.

Asia Mezzanine targets investments of between $15 million and $50 million in single transactions and up to $100 million via coinvestment with strategic partners. Among its most recent deals was the investment of $40 million of mezzanine capital in China's Anhui LingYiu Group, a speciality precision manufacturing company. The business is backed on the private equity side by CDH Investments and China Everbright Investment Management.