AMA: 3rd year analyst at a boutique PE fund in the SEA region

Hi guys, so I was recently certified and this is my first post ever in WSO. I guess an AMA would be quite benefical to the WSO community, especially to my fellow Asian/South East Asian or basically anyone working in the region.

My background, in summary:
1. 3rd year analyst at a boutique PE fund in the SEA region.
2. Bachelor's degree at an average uni in the UK. No other certificates, networked my way into this position.
3. Exposure at both PE (growth equity/late-stage)/VC (early-stage) level (as an independent analyst for a CVC through the Shark Tank tv show in my country).
4. My team is quite small so I get to work directly with C-level execs and get involved in all parts: from inception to disbursement & post-investment.

I will try to answer all questions, if possible.
Thank you all

WSO Mentors

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Comments (27)

Nov 20, 2019

How arduous was the recruiting process? What was biggest hurdle? And did you explore other regions for jobs other than Seattle? Thanks!

Funniest
Nov 20, 2019

Lol buddy read the description. Southeast Asia, not Seattle.

Gimme the loot

    • 11
Nov 20, 2019

Ha. Gotta work on my attention to detail.

    • 1
  • Associate 2 in CorpDev
Nov 21, 2019

Lol this mix up was colossal... like preparing for IB interviews and going for a trading interview instead...

Nov 20, 2019

hahaha lol, however mate if you're interested in the recruitment process in South East Asia, look for my comment below Ive outlined a bit. cheers

    • 1
Nov 20, 2019

Awesome thanks for doing this! How many rounds of interviews? What material did you use to study? Is there a ton of opportunity to get PE jobs like yours in Sacramento?

What concert costs 45 cents? 50 Cent feat. Nickelback.

    • 2
Most Helpful
Nov 20, 2019

Mate, Im not sure about Sacramento but I can outline a bit of the process here with buy-side PE/VC firms here in South East Asia.

1st: Headhunt phone interview: usually 15 - 20 mins chit chat on your background, what you look for and if youre interested in the position they are offering. Then they will refer you to their client
2nd: High-level interview (phone/video call): usually the MD or the Partner himself will test the waters, a short 30 mins call discussing your background, your strengths & weaknesses, investment ideas & philosophy, etc...
3rd: Technical interview: a couple of Associates/Principals (VP) will drill you for 1-2 hours on past experiences, every deal you have made/participated in. They will test your finance/investment knowledge base as well as real life experience.
4rd (not common): Case study/Investment valuation: you're expected to analyse a given company/business idea in a set timeframe (2-3 hours) and give recommendations back to the MD
5th: if you have passed the first 3 - 4 rounds, youre 90% in. The last round will be a dinner with the team. Considering how small the teams are in SEA, this is very important that a candidate will be a fit, culturally and professionally.

The whole recruitment process will basically take anywhere from 1 - 2 months.

EDIT: forgot on the material I used to study: so to prepare for this I had a mentor who have interviewed a lot of candidates for PE/VC in the region. He gave me some nice really nice tips:
1st: you have to own all your past experience, like really know every little details. Also be creative, think alot what would you have done differently if you were in charged of making investment decision. In buy-side world, they look for investors to-be, not just execution-er. So brush up on your investment ideas/philosophy and be prepared to defend your thesis.
2nd: Try to interview a lot, the more you do the more experience you get.
3rd: On the knowledge side, its hard to say. Sometimes the employer will throw in some really random finance/investment questions just to test your ability to think on your feet. It helps if you studied CFA/CAIA and such, give you a broad knowledge base of the investment world.
4th: Make great use of the Private Equity Interview Course on WSO, really helps.

Hope this helps. Cheers!

    • 4
Nov 20, 2019

Hey buddy thx for doing this.
I'm from East Asia (Non-Chinese) and I'm going for masters in UK at a target school next year. I plan to get a IBD job in London then want to come back to SEA to work on buy-side (VC/PE). Would it be possible to work on a buyside without speaking local languages?

Nov 20, 2019

Hey mate, kudos on your masters ! Hope you do well and stay on track. I have seen many investment professionals in South East Asia regions who have lived and worked here 20+ year and speak only English, so Im sure you will get by.
However, at entry levels (think FT analyst/associate) its preferrable if you speak at least one local languages, but it totally depends on the firm (read: not compulsory). In the investment world, English is widely common across SEA region.

    • 2
  • Intern in S&T - FI
Nov 20, 2019

Hi there, thanks for doing this.

Have a few questions:

Do you see people from sales and trading backgrounds in the PE space? Personally speaking, I see myself starting a career in sales and trading, but I don't see myself staying in this space for a long time (say 5 years), and I do see myself working in the PE or VC space in the future, especially in the SEA region where there's just so much growth.

Do you have any advice to offer? Perhaps thinking of doing an MBA, try to pivot out of sales and trading and do IB, before jumping to PE- do you think this is a feasible move?

Also- I assume you're based in Singapore, right? What markets do you see growing now? I feel like Indonesia's definitely one of the huge winners given its large population, growing middle class, and increasing purchasing power.

Nov 20, 2019

Hey mate, thanks for asking!

I do sometimes see people from sales & trading backgrounds in the PE space, but not too common. But you are right, getting an MBA is crucial for making a jump from equity desks to PE, my senior was a PM for a couple of years, took an MBA and then got her gigs in the PE industry. But to be honest it is not advisable, most of what you do in sales & trading wont be carried fwd to PE/VC space, so it could be a waste of time. Equity research, on the other hand, is more relevant to PE/VC space than sales & trading. IB is the traditional route so I have no comments.

In the SEA region, we can clearly see that Vietnam & Indonesia & Malay are 3 of the top, most attractive markets right now thanks its their large, young pop base and increasing in disposable income. Every fund is buying into this same story, hence its quite competitive in sectors such as consumer goods, TMT, retail, education, healthcare, etc... However, the bad side is that exit opps are not looking as good as we want them to be, yet. (read: IPO, trade sales, buyout)
In a way, these are still emerging markets so it will take time until maturity.

    • 3
Nov 21, 2019

China growth equity guy here, thanks for doing this OP

  1. Are there any specific sectors/industries you are looking at/regard highly for the individual countries (Indon, Viet, Thai etc.)
  2. What is your take on current valuation levels? Compared to China/India, SEA valuations are high given limited TAM (fragmented market with business models not easily replicable across borders due to language/cultural/developmental differences)
  3. What is your deal sourcing model?
Nov 22, 2019

Thanks for asking mate.

1) Interesting industries to look for
Vietnam: Education/Healthcare/Renewable Energy these are the boom sectors in VN right now. The general public will pay mad money for good quality private education & healthcare which means awesome payday for investors in those sectors. Parents will go into debt just to put kids in the best schools possible. RE is really hot in the last 2 years thanks to government incentives (Feed-in-Tariff for solar energy is 9.35cent/kwh compare to India 4cents/kwh or Thailand 5cents/kwh. For wind is 8.7cents/kwh).

Indo: Healthcare/Education/Retail: large customers base (264 million), increasing disposable income in MAC population translate to increase in consumtion & demand for healthcare/education/retail.... The healthcare industry in Indo is really hot right now.

2) Valuations are high right now, thanks to stable political environment in SEA and hyper economic growth. The other reason is that there are so much dry power in the region right now and not so many good deals out there, hence funds are fighting cats and dogs over the good ones which really inflated the price. However, a boutique MM fund we dont and cannot compete in price with other MFs so we tend to stay away from overly-hyped assets.

3) Internal & External:

Internal: our team members, even at analyst level, are expected and encouraged to source deals, because we understand the fund's investment appetize hence the quality of the deal we source ourselves are pretty good. In 20 deals we have made over the past 9 years, 60% of them were sourced in-house.

External: through all channels really: Big4 advisory, IBs domestically & regionally, coldcall, cold-email, a friend of a friend of a friend's neighbour who works at a abc xyz company. South East Asia is really small so I guess people bounce ideas back and forth quite frequently.

In short, for a MM fund, we have more deals than we can actually handle.

    • 4
Nov 21, 2019

Hi, thanks for doing the AMA.

1) In your opinion, how's the deal landscape in the region between MM boutique vs MF? Boutiques are typically founded by locals with strong ties with companies so might have an advantage on the deal flow?

2) Are you considering moving to SEA MF, and do they hire from MM boutiques there?

Thanks

Nov 22, 2019

Hi there,

1) You are right, boutiques with local expertise have better deal flow because companies here in SEA/Asia prefer working with local people, which mean having local soldiers on the ground really help. Futhermore, MFs operate at higher level, deal size for MF are in the USD 100M ++ to USD 1B++ which you dont see very often in the region. But at the MM levels, deal size are anything between USD 10M to USD 50 - 100M which are abundant. LBO deals are quite rare around here, but mezzanine/bridge financing/growth equity deals are more common.

2) I prefer working in a MM, mainly because of the deal flow/exposure. In MMs, I get exposed to at least 5 - 6 deals a year and will help close at least 2 of them. (size : USD 10 - 50M) which is much more fun and exciting than at MF where a billion dolar deal can take up to 2 - 3 years to close. Thats not all, when you deploy USD 1B in a company in South East Asia, you're not gonna be able to fully exit that position within 4 - 5 years. It takes a longer time, and will have to be divided into tranches because the market is small.

Cheers.

    • 2
  • Associate 2 in CorpDev
Nov 21, 2019

Thanks for this OP - can you comment on compensation ranges for boutique funds in SEA? An indication / range of basic and total comp would be very helpful

Nov 22, 2019

Thanks for asking ! Per my knowledge of the two markets that I am most familiar with:

In Singapore, base salaries look something like this, for MM boutique funds:
* Analyst: SGD 50 - 70K/annum (USD 36 - 51K) for both VC/PE
* Associate (pre-MBA): SGD 70K - 80K (USD 51 - 58K)
* Sr. Associate/Principal (post - MBA): SGD 100K - 120K (USD 73 - 88K)

The beautiful thing in Singapore that PIT is really low. Say you make SGD 160K all-in (USD 117K) , guess how much you pay in income tax for that year ?
A mere SGD 13750 (USD 10K). Hence, lots of IB guys and PE/VC bros in Sing effectively save 50% of their income after taxes and living expenses.

In Vietnam, boutique MMs pay:
* Analyst: USD 18 - 22K p.a
* Associate: USD 30 - 36K
* VP: USD 48 - 60K
* AD: USD 60 - 70K
* D: USD 90 - 100K

MFs in Vietnam pays a little bit higher at top levels, like the Korean/Japanese/European MF can pay 30% above market average.
PIT is higher in Vietnam than in Singapore,* if you make USD 100K, you'll pay 35% in tax*. But then again living expenses in Vietnam is 30% lower than Singapore.
In terms of total comp it varies a lot, I have seen some really big pay day at some MF funds where the lowest paid analyst received 24 months salary in bonus, but on average bonuses will equal to 30 - 50% of your base salary.

Indo/Malay/Philippines/Thailand the wages are within those ranges.

Jap & China & Hong Kong & Korea are a higher, like 20 - 40% compare to South East Asia.

Hope this helps!

    • 2
Dec 12, 2019

Just fyi - I think the comps you mentioned here are way below average. There are 2 types of firms operating in the region that I'd consider legitimate - the regional firms and the global firms. Regional firms range from those managing multi-billion dollar funds such as Navis, Affinity, Baring etc. to those managing a few hundred mils (Dymon Asia.) Global firms that are active in the region are the typical megafunds you see in the US: TPG, KKR, Warburg, GA etc.

Comps for both buckets are MUCH higher than the figures you posted across all level - with the megafunds paying similar cash comps (ex carry) to their US / European ops.

I work at one of the large funds, much more senior than you, but have been through a few roles in a few firms in the region. Just thought you'd want to know - everyone's circumstance is different, but keep yourself aware so you don't get shortchanged.

    • 1
  • Analyst 1 in IB - Gen
Dec 18, 2019

The base salaries seem to be way under the market rate, from what I hear entry level at MM/UMM PE and SWFs like GIC and Temasek are in the range of SGD100k - 150k/annum.

Nov 27, 2019

Pretty cool that you're doing this!

From your perspective what do you wish external sourcing channels did better? (e.g. big 4 advisory or IBs)

Nov 27, 2019

Thanks for asking John.

The one thing that fund managers does better than IB guys when making-a-deal is that we actually structure the deal in a way that align the interests of both parties, a win-win situation. To do that, you have to think like the owner of the business and you have to have the wants to make it better. We are greedy people, but we make sure that whoever in bed with us will make even more than we do.

IB guys are sales people and they are quite short-sighted, they think about maximizing price/benefits/commission, hence they have a shitty way of structuring deals.

    • 1
Nov 27, 2019

Hi OP,

any tips for undergrads here in SEA trying to enter into MM boutiques? And any advice on networking within this region (I believe the culture is slightly different from the US).

Thanks!

Nov 27, 2019

Try to strike for an intership at a good IB shop, top tier are GS, BAML, Nomura, JPM but if you cant, 2nd tier like CS, Citi, Barclays, DB are still very good. The competition is quite fierce (although not as bloody as in the US) so make sure you got that GPA sorted out and be prepared using prep materials on WSO, it really helps.

SA -> FT analyst -> grind for a couple of years -> MM/MF funds, the path is similar anywhere else. Except that I think you can break into MMs quite early, even after 1 year at sellside.

Some MMs even recruit right out of college but you gotta be quite exceptional and well-networked to get an internship position.

In short, be aggressive when looking for opportunities and make sure youre are well-prepared when they come.
Good luck!

    • 2
Dec 4, 2019

What are the best headhunters to reach out to in the region?

Thanks!

Dec 5, 2019

Thank you for your time here! I am currently an analyst in a Bulge bracket Industrials group in the
US. originally from South Asia and looking to move back to the region.

Any advice? Thanks!

Dec 11, 2019
Comment
Dec 16, 2019