Friday Letter: Asia Drive

Asian private equity is all the rage. Practitioners around the world are focused on it, thanks in no small part to a steady stream of news about ever-larger funds being formed, bigger deals being closed and better performance figures being posted.  

More importantly still, Asia has become the driver of the world economy, and as such it is driving private equity as well.

As result, a rapidly growing band of home-grown managers are entering the market for the first time, and leading Western firms are expanding into Asia too. Equally noteworthy is the fact that more and more Asian institutions of significance are discovering the asset class as well.

But let none of us assume that private equity’s progress in Asia will be untrammelled. As often happens in financial markets, success can bring danger in its train. For the first time ever, investors are beginning to profit in a big way from Asian private equity performance. But, at the same time as this welcome development is celebrated, the impression should not be created that broader social obligations are being overlooked. The current troubles at US manager Lone Star’s South Korean operation underline that the public image of private equity can be easily tarnished.

Also, it is worth considering that private equity has only a tenuous foothold in Asia at the current time. The relatively small number of GP groups in the region compared with the US and Europe (and the even smaller number of stellar performers) signposts the region’s inherent lack of maturity. Investors should be more worried about the quality of fund managers than any supposed macroeconomic risk.

But Asia’s immaturity relative to private equity’s more established dominions in the US and Europe first and foremost makes it in many ways a more exciting place to be.

It also makes it an exciting place to write about. And this is why, following the recent opening of our office in Singapore, we have launched a new monthly magazine, the fourth in our portfolio. It’s called PEI Asia, and there are no prizes for guessing what it covers. To order a sample issue of the title free of charge, just click here.

We would say this wouldn’t we, but do get yourself a copy of the magazine: we’re confident you won’t be disappointed.