Exclusive: Zhu to co-head Flag Squadron Asia

Myron Zhu has joined fund of funds FLAG Capital Management as a partner and will co-head investment operations for FLAG Squadron Asia together with Wen Tan, partner, the firm has revealed to Private Equity International.

In China, Zhu will direct the firm’s private investment activities with the support of Alice Chow, senior advisor, and its China-focused team. He will also serve on FLAG’s Asia investment and management committees and will be integral to its increased co-investment activities.

Zhu was formerly head of alternative investments, chief investment officer Asia, at JP Morgan Chase Bank in Hong Kong, where he founded and built the firm’s Asia private equity business. Prior to that, Zhu was with DBS Private Equity in Hong Kong, where he led the firm’s investment activities in Greater China.  

Zhu will join at a difficult time. The fund of funds business model is not only challenged, the numbers for deals, exits and fundraising in Asia have been trending down for the last three years.

“The overall alternative investment performance in Asia in general is not that encouraging,” Zhu told PEI.

“But if you look at certain funds they are performing very well. We plan to focus on delivering the numbers for our co-investors and despite the overall general market headwinds, and I’m comfortable we’ll do well.”

Peter Denious, partner, added: “There’s definitely a shakeout going on and it will take a long time. It’s clear that funds of funds need to adapt and demonstrate they’re adding value to the underlying investors by producing good returns.”

“Asia as a geography for investment started strongly. But in the last two-to-three years, results have been solid but not what people are looking for. So we want to be sure that were delivering value and finding ways to generate alpha.”

Zhu’s appointment represents the completion of the December 2012 acquisition of Hong Kong-based Squadron by Connecticut-based FLAG Capital Management.

Denious, who focused on integrating FLAG and Squadron over the last 18 months, will now focus back on US venture capital, which was his original area of emphasis at FLAG.

FLAG Squadron Asia has a staff of 15 and it constructs and manages portfolios of private equity funds and co-investments across Asia Pacific on behalf of its clients, which include endowments, family offices and other institutional investors.

Stamford, CT-based FLAG Capital Management has had $6.5 billion in client commitments since inception. In October 2012, it acquired Hong Kong-based Squadron from owner Search Investment Group for undisclosed terms, PEI reported earlier. The deal marked the first time FLAG had acquired another fund of funds in its 19-year history.

Since the acquisition, FLAG Squadron Asia has seen the departure of several professionals, including two 10-year veterans, partners David Pierce, formerly chair of the FLAG Asia investment committee and (until December 2012) chief executive officer, and Jacob Chiu, member of the investment committee. 

Pierce, who has remained at the firm due to investor commitments, will officially depart in the coming weeks.