You have expressed interest in building exposure to Asia – what kind of appetite does ATP Private Equity Partners have for Asia-based managers?
“It’s fascinating how things are moving ahead in Asia. When you’re there, you get a different feeling compared to the US and Europe where politicians are struggling with low growth. We do commit to managers based in Asia, we’ve been looking in the region for five, six years, we’re approaching seven years and we’ve made only a few commitments.
“So we’ve been sort of waiting to see how everything plays out. Some of it looks good. Long-term, we have 10 percent set aside for emerging markets. We make commitments of around €500 million a year on average, so some €50 million will go to emerging markets, but that includes Latin America for us, and we’ve been more active in the past three or four years making commitments in that region.”
How comfortable have you become with Asian private equity?
“It’s a maturing market, that’s what gives us some comfort. It was difficult to commit, but now there’s more of a track record. There’s still an issue with team turnover, or key-man risk. But on the other hand, there are also some teams that seem to be a little more stable.
“In Asia, there is perhaps still a little bit of undersupply of strong, well-educated managers with experience in private equity. Compared to the demand for managers like that, there’s an imbalance. When someone is successful, getting opportunities to start something on their own or joining someone who wants to make a footprint in Asia, it must be tough to keep talent.”
Why are you more comfortable with Latin America?
“Even if we have an allocation set aside for emerging markets, if we don’t see opportunities, we don’t go in. We’ve been very comfortable with an area like Latin America because some managers have been through a number of cycles, with 20 years of investment experience in the region. There’s experienced teams that have been together for a long time, who have made strong investments in the past. That makes it so much easier to get comfortable. It’s not at all just Brazil, we’re seeing growth more on the West Coast – Peru, Colombia and Mexico.
“The funds we have are regional funds, so we don’t have to invest in one particular country, and that makes it a bit easier for us.”