Life insurance company MetLife is eyeing more country-focused managers from developed Asia, but access to such GPs remains a challenge, Shirley Ma, its director for private equity Asia, said on Wednesday.
“In Japan and Korea, there’s a deep bench of quality mid-market managers, but they may not be too sophisticated in raising capital from foreign limited partners in terms of how they run the process or communicate with LPs,” Ma said at the Hong Kong Venture Capital and Private Equity Association Asia Private Equity Forum. “I think the challenge is uncovering opportunities in those types of markets.”
She noted that the firm in recent years has shifted its investment strategy from pan-Asian managers to mid-market managers in mature markets such as Japan, South Korea and Australia.
“We see Asia as a set of markets with different features, state of development and at different points in the cycle. Many of us invest predominantly in growth opportunities in China but the distributions in China hasn’t been that great when compared with other mature markets,” she pointed out.
“When we think about portfolio construction, Asia is not purely for growth equity, we are looking for a balance of cashflow and capital gains. In that regard, we find Japan and Australia attractive markets and you see a churn of portfolio companies every three to four years, and that complements very well with China.”
MetLife manages $583.3 billion of public securities and private markets assets. Of that figure, $6 billion is in private equity – 10 percent is invested in Asia, about 40 percent in the US, 30 percent in Europe, and a marginal percentage in Latin America, Ma said.
The insurer’s current Asia allocation includes commitments to 12 GPs, of which three are China-focused and represent approximately 20 percent of its total commitments.