Asia Pacific Private Equity Insights

I posted the below in my introduction to the forum, but I figure maybe not too many people have seen it so am re-posting here. Apologies if this breaks any rules (I'm just trying to be helpful).

Hi guys, I'm more than a few years out of college (let's say I'm 30 years old) and work in Hong Kong in private equity. Before anyone starts asking any questions, let me be very clear that I do not work for a PE house or make investments. I work for a consultant/advisory firm.

A bit about me. American born, raised and educated to Asian parents, so I'm first gen, speak two Asian languages (at various levels) and have been doing this for over five years now, based in Hong Kong, covering Asia private equity (includes VC, Credit and some funky strategies as well).

What do we do? Essentially the big institutions and other investors (Sovereign Wealth Funds, Public and Private Pensions, Endowments, Private Banks, Family Offices, etc) all pay us a fee to tell them which funds to invest in, or which geographies, or how to weight portfolios. It's sort of outsourced fund due diligence. An even easier comparison is that it's Private Equity Fund of Funds but without actually investing.

This means that I (and my colleagues) essentially get to see tons of data and meet tons of people in the industry, since we have to evaluate funds, we meet Partners/MDs and their IR staff, who pitch the funds and provide data, placement agents (who raise capital for funds and take a cut, like regular investment banking), other investors, Fund of Funds etc.

How can I help? Well since I've been out of school for about 8 years now, I'm happy to answer career questions (where I've stumbled, made mistakes in interviews, how tough it is to change careers - which I know very well personally), culture in specific shops, how good shops are performing, how shops are set up, what people look for in candidates (I don't know as much about interviews for PE funds since I've never done one - have only heard about them) etc etc etc.

I'll start with some hints. Most funds in this region generally suck and have not performed too well. It's a lot of public market beta and a ton of shops are very very heavily key man driven and tons of very mediocre people (I guess like in any profession). Just something to keep in mind if an interviewer is giving you a tough time...

Please ask away. All I can promise is that I will do my best to be honest and frank in my answers.

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Comments (42)

Apr 10, 2014 - 9:44am

Thanks for the intro Jamoldo. What are the Asian SWF and pension funds' sentiments regarding fund of funds that has north American middle market private equity exposure? A fund of funds that helps their clients scale down to north American middle market pe funds, with decent exposure of co-investments to mitigate the J curve. I know a lot of Asian SWF and pension funds have strong appetite for those mega funds because dd capability is limited on smaller mm or lower mm funds and they have to put money to work, but let's be honest, most of mega funds at the current market don't generate satisfying returns. And I think they also try to build in house pe team that invests in smaller funds.. What are you thoughts regarding smaller funds of funds (not Hamilton Lane type) that help them scale down to north American middle market pe funds? Thanks so much!

Apr 10, 2014 - 9:58am

Hi Jamoldo,

Thanks a lot for this post. I work at a BB in credit research. Will it be possible for you to name some funds (PE or value investing based equity/credit shops) that you'd recommend as good places to work (i.e. competent team in your opinion, even if the shop is small) and who'd be willing to hire a non-Mandarin speaker from a non-IB/M&A background?

If not, will you be able to suggest the best way to network for a non-traditional student without any alumni connections?

Apr 11, 2014 - 4:52am

SWF/pension appetites for FoFs to help do MM/LMM PE funds in the US.. I don't really know to be honest. Most pensions here not too sophisticated. This is a new game for them. SWFs it depends. Most have built out direct investment teams, either internally or by bringing in secondees (ie. CIC invests in Blackstone and as a part of the deal they want Blackstone to ship over like 2 VP/Analyst/Associates for a year). Guys like Temasek/GIC often chase deals on their own or team up with funds to make investments. Or they set up their own smaller vehicles to make such investments, so I'm not sure FoF is up their alley. I think the real issue is size of the MM/LMM funds more than diligence capabilities (we're assuming a "top tier" SWF like GIC/Temasek/CIC) that need to put out big ticket sizes and are also very aware of strategic needs/wants (ie. its not just about making money). Other SWFs that are less sophisticated may do FoFs to get exposure but I'm sure they will negotiate something where the FoF invests some money but then also negotiates on their behalf to invest directly in the fund as well...

Arya - one of the best things to do is to get in with headhunters here. BB Credit research is a very viable way to get into shops anywhere - it is a fundamental skill. You may not do PE (I've seen it happen though), but there are credit funds that need proper credit analysts and plenty of them don't speak Mandarin (plenty do though). I think your work experience will count more than the school now that you are at the BB. Best way is probably to get an internal transfer by your bank. People will leave, offer to "fill in" while they look for a replacement or to "travel and cover some names" since the older folks with families won't want to. Then network like hell with your clients who will be asset managers/HFs etc. Get drinks, play golf, do yoga, whatever it is. Plenty of funds on the more liquid side want local folks but don't always need them since they are behind a screen more often than not. Just depends.

Tough to name "good shops" since they are relatively few, especially of scale. It's tough to raise money here. Like having $300m is solid, $500m is good, $1bn is very large. anything more is like huge. It's not like in NYC/London where $500m is like nothing (ie. nice, but can be gone tomorrow). Credit.. I think of PAG, SSG, BFAM, Claren Road, ARCM, Tahan, LIM, Mount Kellett, ICG... some others but that's what comes to mind to start.

hope this helps.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
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Apr 12, 2014 - 2:32pm

Welcome to the forum Jamoldo, maybe a bit of a general question but since you've seen so many funds and their (mediocre) performance, have you seen a pattern of firms that are more successful than others? I.e. are certain funds simply employing the more talented people, are they using different strategies, or is it due to sectors or geographies? I think in many emerging markets you see a wider performance range among PE firms than you see in the US or Western Europe. Particularly many of the "Western" firms struggle in these markets, why do you think is that?
Many thanks in advance!

Best Response
Apr 14, 2014 - 11:52pm

Hi Hugh - on Legend, not so much. Tough to get access to (I think only my colleague has met them, like once). But it's Chinese government linked and they can clearly raise money. But the big one to follow rather than them is Hony Capital run by John Zhao.

Eurolocust - the thing is that Asia PE is still relatively new. It's like a 14 year old industry. There were a few firms in the 1990s most of which lost money. Given that its a 14 year old industry that means only the really established ones, like say, CDH, or Baring PE Asia have some sort of track record that's demonstrable. The other thing is that there has been so much movement within the industry that its tough to say who is sustainable and who is not. That's not including tons of senior and middle level types who have left to start their own shops.

There aren't really too many funds that have outperformed consistently even in this short period of time. A lot of funds do well at small size then they go and raise a ton of money and it becomes a fee game, more than a carry game, or they just can't scale the strategy (Navis is a perfect example). The single country funds are tough because they are truly local, have lots of insight, don't have to convince IC in HK/NYC etc about deals and can be quicker and thorough. Problem is that when the market isn't good, you can't make money (ie India has been awful since 2007/2008 - people minted money between say 2001-2005/2006). So even the best India fund hasn't done well (its tough to when the currency loses 30-50% of its value over the life of your fund. If you invested in say 2006, when USD/INR was like 40-45, now its at 60. Of course the funds are raised in USD but investments made in INR. So even if your portfolio companies are good and are valued at like, say 2x on an INR basis, but you invested at 45 INR/USD and now its at 60 INR/USD.. well you get the drift. Ditto with China funds except A-share IPO markets were shut for 18 months. So all of these growth capital investments (ie. invest 100 bucks to buy 10% of some company, grow it, list it, exit) got hit hard since well, IPO markets were shut and it was tough for companies to get new funding and there has been no liquidity for LPs in these funds.

The Pan-Asia/Global guys can pick from markets and aren't beholden to one but they need a diverse portfolio as well otherwise their investors often complain (ie. hey I had X fund as a pan-asia but its 70% china, wtf?) even if that's where the opportunity is. Why do these western firms struggle? Well some of it is time taken. They are slower since they have more processes, more approval layers. Some of it is culture. Some of it is having too much money. Ie. If you have a $5bn fund, a little $50m deal just won't move the needle much though that's where the opportunity might be, you have to hunt for a $500m deal and those will have bankers and higher valuations and competition etc etc. Some of it is local markets, ie. if India and China suck, what can they do? Some of it is competition, not only are they competiting with other global funds, but also the big country-only ones, as well as well-entrentched and rich families/conglomerates, stock markets, bankers who are trying to convince the target company to list, sovereign wealth funds etc.

A lot of Asia is also very key person centric, ie. who knows who. Who is related to who, who's daddy is in the govt etc etc etc. This is a tough place to make money even is you are a local. It's not always so commerical (ie. it can be strategic) etc. I hope this helps.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
  • 2
Apr 16, 2014 - 9:13am

Thank you so much for the great info! I am currently doing M&A in a top firm in HK and would like to make the move to buyside. Would it be possible for us to meet up in HK at a time you find convenient? Thanks so much in advance!

Apr 19, 2014 - 4:49pm

Sure. I don't know how I would be able to help since I don't know the recruiting process well, or at all really. But happy to meet when back in town in a few weeks. Just shoot me a pm. Cheers

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
Apr 20, 2014 - 10:42am

Great to find this post. Very helpful indeed. I am interested in career opportunities in PE.

I have been very interested in PE for a long time. However, as a PhD student with a science/engineering background, I doubt I might be able to break into this area right after I graduate. So I am thinking about management consulting instead, which will offer a great exist opportunity into PE. However, I am still holding some hopes of skipping the medium step.

I am flexible to work anywhere, mostly NA and Asia. But I am not quite familiar with the PE in Asia. Do you know what qualities of applicants they are looking for on entry-level positions? Would you please give me some suggestions on how to prepare for job applications in PE firms?

Here is my background:
PhD candidate in science/engeering field, expected to graduate next year
I founded a grad student club, which has already worked with 3 start-ups and 2 VCs on around 8 market research projects in total. We just switched our focus to VC projects a couple of months ago. And I am still looking for project opportunities with new VC firms. We evaluate the market opportunities for early-stage startups, including market sizing, product, customer, competitors. Since we don't have the business background, we are not capable of developing the financial models.

What do you think I should enhance on my resume to break into PE? Thank you very much in advance.

fight for MBB
Apr 20, 2014 - 8:18pm

Thanks for the post, Jamoldo. I am going to intern at a Chinese bank in their Private equity department in Hong Kong. I am not sure how big they are but at least according to some research I've done on Linkedin, they appear to be an over $1 billion fund. How active are the Chinese banks' private equity business? Also, is it possible to break into private equity in Hong Kong out of US undergrad? Hopefully I will get to work on a decent number of deals and break into private equity in my senior year, either in the US or in Asia.

Apr 22, 2014 - 11:03am

Susan - are you a native Asian? That would help a ton in Asia - otherwise might be best to stay in the US where the real innovation is happening - you could always move to Asia if there is a need (someone will find you). You could use and your PHD/sector/science understanding to help out with investments in companies/start-ups in your field. That sort of insight and technical understanding is critical and much more important than some financial model (which won't be complex since the deals you would do aren't LBOs, its mostly straight financials and comps, if my understanding is right and anyone can learn it - heck with the help of a friend I sort of taught myself how to model a 3 statement - not hard just takes some time). You deal with start-ups and VCs.. why not try to finagle your way in that way? You work with these people right? You must be doing something right. Do you know your clients, the VC firms? Try to build a rapport with them and get to know them and they will get to know you. You will be a familiar, smart person they have dealt with and much less of a risk than interviewing someone random. Maybe plant the seed in their head that you'd like to help them out full time once you graduate, even if on a trial period if they balk at giving you a gig. Lots of people without business backgrounds make it into VC or even PE (in asia they can be quite similar at times, just invest in different stages, ie. VC gets in when the company is not profitable, and PE comes in months or a year later when it is...) Key is to play your technical understanding of the field itself... Getting into a PE shop.. that might mean going into a bank, becoming an accountant/consultant etc. Or having a strong personal relationship and having proved yourself. Asia can be hard since its not always as formal (unless its a big name shop) but also more flexible.

Imnotasmartass, I deal mostly with overseas clients who invest through like Cayman and stuff (ie. not Chinese who do RMB deals). Chinese banks are active in PE. CICC has a fund that raised USD with an offshore structure to do PE in China. CDIB is doing the same now (Taiwanese I know)... Everbright has something similar but its very very local (ie. no one can speak English). The other shops I don't know about but most of them probably do more onshore deals (ie. with Chinese investors who are not our clients and use onshore structures) or do things strategically with their PE fund clients with balance sheet money (ie. ICBC invested in a deal with CDH - don't know which part of ICBC did it). The Chinese banks definitely have PE teams though.

You can definitely get in from the US and from college, particularly with the internship you are getting. Be sure to network while you are there, with other people at the bank/in your department, as well as other PE folks in HK when you are there.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
Apr 24, 2014 - 1:50pm

wow, wonderful information! Thank you very much Jamoldo!

Yes, I am a native asian. The thing I am worried about most is my connections in Asia. I almost had 0 connections in business field in Asia. And I am not familiar with how PE/VC/bank or other financial organizations work in Asia. But it will be a great opportunity to go back, if I can find a position there. The advantage to stay in US is I can at least find some 1st level connections to place me on conversations with guys in PE/VC. And like you said, the firms in US are more formal, which makes me feel more comfortable to work with them. Regarding the networking in Asia, the biggest problem for me is to find people to connect with. I totally have no idea how doing that. The only way in my mind is looking for people through Linkedin and sending them some cold emails. Do you think that might work? Or do you have any suggestions?

The VC firms that I found projects with for the club are quite small. They only invest on early start-ups. I mean very early. None of their clients has been on IPO yet. My hunch is a VC firm with that size will be much much harder to break into than a big nationwide PE firm.

One more question, do PE firms in Asia set up any recruiting timeline? That being said, when should I apply for the positions (I am graduating in next Aug)? And do they also use the online application system or is it all about networking for positions?

Thanks again Jamoldo! Actually, I was in HK last May. But I had never thought about any opportunities in Asia when I visited. Otherwise, a coffee chat or a lunch chat with some guys like you would be extremely helpful.

fight for MBB
Apr 27, 2014 - 7:35am

Do non-asian foreigners have any chance of breaking into PE in HK?

"Entrepreneurship is living a few years of your life like most people won't, so that you can spend the rest of your life like most people can't."
Apr 28, 2014 - 1:35am

just found a friend to place me on a conversation with a guy in a PE firm in China. He told me it was impossible for me to break in since I do not have work experience in IB/consulting/PE or a business degree. A PhD in engineering field worths nothing to PE firms. So sad to hear that

fight for MBB
Apr 28, 2014 - 2:06am

Thanks for doing this.

How does the hiring scenario looks like? Do PE firms in Asia hire people straight out of undergrad or is it common practice to join PE having IB background?

Apr 29, 2014 - 10:42am

I see another long post coming an will answer in order...

Susan - The only way to build contacts anywhere is to hustle. Cold email, follow with a call, try to have coffees, ask friends who may know other friends. Ask classmates, professors, you name it. Heck if your university has an MBA program, try to find out when banks and PE firms are visiting campus. As long as you can somehow get in front of someone senior in those events (cocktails etc) your knowledge may be of some use to them and get you a foot i the door. As for your VCs even if the companies have not IPO'ed yet that could be your way in. You have technical knowledge and skill which many do not have and investors need to understand the science/technology behind the actual stuff. There are always PHDs in VC. I have certainly seen them. In fact this is probably your way in. Even if the VCs are small, they know you, like your work, probably like you as a person and so on and so forth. So keep doing good work for them and when you're having lunch/coffee/beer/in the elevator or whatever just make some small talk (how did you get into this gig, it seems really interesting etc etc). If they don't get the hint, then even propose an internship or working on more projects. This way you will be seen as a person that they know, like and can deal with which means you are far less risky than some person they are just interviewing. In that way a small organization is less organized and more willing to take chances, I am not too sure about how recruiting works for a lot of the shops. I imagine the bigger ones might be more structured, but the smaller ones more ad-hoc and on a need-by basis. Your China PE friend is wrong. Getting in with IB/consulting/etc is the normal path that is taken by many but I have seen fresh grads do it and others from industry/grad school. Once again you have to emphasize your understanding of the technical/science stuff that no one else will. That is what is in short supply. Not excel/ppt skills or whatever.

Aspiring - it is getting progressively harder, to be honest. Unless you are a sector specialist or sort of stumble into it. Most of China/India/Japan/Korea stuff is purely native staffed or maybe the odd foreign born person of that ethnicity. They want locals. SE Asia still has a fair few non-locals but it is quickly localizing as well (Indonesia, Vietnam etc). Think about it. Why would a firm that is trying to source local deals, do local research and execute, hire someone from outside? It used to be that no one wanted to come to Asia. Asians were in other countries studying and working in other countries since the economic opportunities or whatever, were "better". So a bunch of adventurous folks went out to Asia, to carry corporate flags, do deals etc. Asian growth then picked up, economies opened up, money was being made, firms expanded and were looking to become more local and get the local edge... My question to you is: WHY do you want to be in Asia? Is it the culture, the food, the people, then mystique? All of the above?

High Frequency Pitching - they do both. The big firms typically hire from IB/consulting but others have been more flexible. People are always hiring at more junior levels due to churn.

I need to ask you guys and everyone who reads this thread a question.

Why do you want to be in Asia?

Think really hard about it. Most firms in recent years have not made money (or enough of it to justify the risk), its extremely competitive, the quality of professionals is generally lower (just not as well trained), a lot of it is insider (either government or family connections or both), the scope to really move up and make a name for oneself is low (if you're not connected since many firms are Key Man Run), promotion opportunities beyond the VP/ED level are structurally little (once again that Key Man thing and that the guys who came a decade ago at your age were green and got all the experience and are now MD/Partner), hours are longer and more tiring (business is a lot more personal in a number of countries, so you have to wine/dine/KTV/golf/see their family) etc etc. Oh and the travel can be brutal (not all deals are in glamorous cities, most are in like the middle of nowhere)...

I don't want to sound like a downer (we all know what the plusses are...), but these are all things I have seen in my 8 years living in Asia (Beijing and HK) not to mention travel and over 6 years of doing DD on firms and have seen lots of data...

Cheers

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
  • 1
Sep 4, 2014 - 2:58am

Hey dude - happy to help. Actis is not that active in SE Asia I think. Last I met them was a few years ago (we cover them out of London but I do visit Asian teams) and they had a very small team and had done only a few deals. I do believe that overall, the Actis track record has just not worked out. I don't think they have blown up, but the returns haven't been great and that's disappointing given their heritage, and they keep having departures.

Bank-linked shops can be tricky since the alignment of interests, especially post Dodd Frank etc is not there. It used to be that the bank would put a substantial commitment to the Fund, as could bank employees, and flog the product to its private banking and Asset Management clients as well as provide a strong name and platform for the team to operate (ie. coming in with a MS/GS business card to chase a deal and show the target company that they could get access to capital markets teams easily is a big sell). In exchange the bank would take all or a big cut of the management fees, as well as the carried interest (I think 50/50 is the worst I've seen, usually the team gets more than half of it). As such top dealmakers look to leave banks after a while so they can keep all of their carry in their own shop. This can be tough since if you are an investor in such a fund and the top guys leaves before all the stuff is exited... So in theory you are left with almost JV or B team level guys (not always the case) managing the fund. That being said, bank products do enjoy a strong platform and can often get into deals...Nowadays the bank can only put in 3% of the Fund's capital so the economics have to be radically changed...

Specifically for Stanchart, I've met the outgoing head, Alastair Morrison a few years ago. A really nice and eloquent guy. SCPE has been quite active in Asia, but I believe (and this is what he told us) that they are purely balance sheet investors, ie. they have no 3rd party capital. So I have no idea how they would be doing as a unit...

Hope this helps.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
Sep 4, 2014 - 5:30am

No worries. That's why I am here. Anyone else, please do ask away. Cheers

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
Sep 4, 2014 - 1:37pm

Thanks Jamoldo for the introduction.

I am currently making a transition to placement / advisory and would appreciate your advice on:

1) Exit opportunities.

I have 5 years of working experiences in banking (Equity Capital Markets) + in-house IR / capital raising in a boutique real estate fund and am hoping to become an alternatives product specialist (perhaps in private banks or large funds eventually) or potentially work in FoF. I am attracted to placement agents for the exposure to different strategies and geographies and like meeting fund managers / investors - would this be the right direction to go? Currently only real estate fundraising experience in a small Asian boutique.

2) Thoughts on working in small placement shops (4-5 people).

Reason for asking is am in final round with one that opened 3 years ago. I am expected to originate deal/investors through lots of cold call and compensation is commission based (thinking of base ~HKD440K + 15-20% revenue) - not sure if this is the typical compensation model in placements. There will be significant product exposure as they do 60% secondaries (assisting buyers/LPs), but it also appears ones exposure largely depends on their "cold-call" or networking ability to source deals. One thing unlike other placement agents though are no separation of distribution / project management so probably good to build experiences on both sides. In terms of career development / as an interviewer, would working in the more "well-known" / sizeable names (e.g. Mercury, Campbell, MVision) / groups in banks (e.g. UBS Private Funds, Evercore etc) be considered more favourable, or it really depends on the deals one worked on?

Would grateful if could share your experiences and advice of any sort.

Sep 4, 2014 - 10:07pm

Hey there - happy to give this my best stab.

1. I think that personally if you are a good fundraiser, that it is transferrable across asset classes. So being a product specialist you probably want to sit more on the project management side (ie. meet GPs, do the DD on them, get to know the product itself, write the memos, pitch it internally to the team, and then once fundraising, manage the dataroom/RFPs etc. These guys do travel some and meet a fair few people, but they are very different from the distribution types, who are always on a plane and canvassing investors/gps, pitching different products in different cities etc. I do think you could probably get into a product specialist role/marketing in a big firm with this background. The FoF and private banking gig might be harder because you are just meeting less people that would hire you (the distribution guys do that). Of course if you wear both hats... Here in Asia, there is a real shortage of people who are decent IR/distributors. Some of it is personality, some of it limited investor base. It's mostly big SWFs, family offices, and the odd pension. Not much else, aside from FOFs/private banks. It's not like the US where you have all these investors, like endowments, corporate pensions, state pensions, insurance companies etc. That can make this a tough game.

2. I would say that this is an interesting position to be in. If you are fresh it always helps to be at a more established shop just in order to blatantly build out your network in order to get meetings at your next stop and be known with a reputation of sorts...getting meetings can be brutally hard at times when you are an unknown. And it can be tough to build a decent network. It has taken me years as a consultant... A lot of secondary funds have raised a lot of money and the FoFs all have secondaries teams as well. Although everyone is complaining about pricing, they will need to put money to work. So for you, this is good. What sounds hard is that you'll be joining a shop where you'll have to do everything on your own, and its a crowded market, and you are new and may not have a network.... Not easy by any means.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
Sep 8, 2014 - 12:28am

Yeah. Easy. They have raised like $1.5bn and do buy-out deals. They want to write $50 - $150m checks (some flexibility). Anything bigger and the big boys (KKR, Carlyle TPG etc) get involved... They typically don't like to or IPO companies. This maens they have to fob it off to other PE players or other straetgics. That sounds fine in theory, but they have not really shown proof of concept to do so (ie. distributions have been pretty low for a LONG time). Plus I can't think there are that many deals in SE Asia that will pass filters/DD at that size.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
Sep 8, 2014 - 3:27am

Jamoldo:
Plus I can't think there are that many deals in SE Asia that will pass filters/DD at that size.

^ This - been harping on this for some time now. In general, any company within this region that can command above such ticket sizes are either 1. government owned/backed; or 2. family owned.

For a multitude of reasons (security, protectionism, etc.), it is close to impossible to invest a significant stake into the former. These business are also largely mature to a certain extent, which is very attractive to the LBO investor. The latter is possible but few families at these current stage are willing to divest their cash cows for reasons such as ensuring financial security for the future generations. Such long term perspectives make it difficult for external investors to take a significant stake in the business.

Been getting a # of PMs regarding PE in the region and thought to contribute here to consolidate information and to hopefully offer perspective from the GP side. Recently transited from a "growth focused" fund (significant minority + absolute zero purchasing of vendor shares) to a "buyout focused" fund. The biggest difference I'm experiencing besides the equity ticket size (~$20m to $50m for growth vs. $50m and above for buyout), is the deal flow. I used to sieve through tons of proprietorially-sourced deals, easily 10-15 deals in a single week but am now looking at 10 teasers on my desk over the past 2 weeks - out of which 7 teasers are originated from outside of Southeast Asia. Also, ~50% of teasers I've looked through are for growth. I think this simply reflects the private equity scene in this region.

Sep 8, 2014 - 4:13am

@"jec" a few (off the top of my head) might be: Creador, Southern Capital (pretty established), Capsquare, Falconhouse, Ancora (don't), bank shops like Maybank, CIMB. The latter has an ex-Carlyle MD leading it.

@"thecoldburns" - welcome and awesome to have your comments/insights from the GP side! I feel like your comments re-government owned protected or family-run applies to much of this region (Greater China, India and SE Asia)... And how often the families and government are linked as well...

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
May 26, 2019 - 10:04pm

A bit curious what are some of the exit opportunities if you doing equity research in a bulge bracket bank in Asia covering mid/small cap misprice across APAC but without a country/sector focus? Are there any buy-side stint that would value such experience?

May 29, 2019 - 12:09pm

I'll take a stab at this. The most obvious buy-side stints would be with HFs, especially if your coverage enables you to be fluent in Mandarin/Japanese/Korean, with Japanese being the most in demand. There are L/S Equity HFs fewer in Asia, bust most of them are in HK with some in BJ/SG. The L/S Equity HFs I'm talking about here are not the A-share focused domestic Chinese ones, which would be another story altogether.

If you are interested in PE, I can just say that this is virtually impossible, as the PE firms, megafund or pan-Asia, are even bigger IBD-focused whores than the US in many aspects. They want M&A experience, brand name IBD group, with a focus on deal experience. This puts you a pretty much the very low end of the totem pole when they are considering candidates. The mid/small cap coverage, and the lack of a market/sector does not help either. I have only seen 1-2 successful cases on BB ER going to MF PE in Asia.

Jun 3, 2019 - 7:42pm

Thank you so much for the reply. I am native in Mandarin and quit fluent in Japanese. The position is based in SG but I am more than glad to relocate to HK or Tokyo if a good opportunity arises. I do am very interested in hedge fund and being a PM at a top l/s fund down the road would be something that really attract me. Having said that though, I have heard that it is going to be very difficult to move into a place like Citadel (or any other fund that can offer a base salary that matches the base salary you received in BB with higher bonus)? Would really appreciate if you can provide some colors in hedge fund recruiting in Asia. How difficult would it actually be? What are some of your suggestions of what I should be doing to maximize my chance of getting to a top hf? Thanks.

Jun 8, 2019 - 8:47am

I've definitely seen instances of people moving from HK/SG ER to PE... I don't think it's quite as rare as you make out.

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Jun 5, 2019 - 1:49pm

As the OP I am flattered that someone revived this thread!

Re Megafunds, my impression is that zyxvzyxv is spot on. If you want PE you can join other shops that are 1-2 tiers below but still do deals and then go from there. Ie. if you are a good investor, then the megafunds/local big guys will be able to lift you, say if you do a deal alongside them or sell them something. It's not direct of the usual approach but I've seen it happen.

LLL_LLL_LLL On HFs, most in Asia are in HK and L/S, and frankly very long biased given liquidity, ability to short, and frankly the investor base and region's growth profiles (Ie. going to institutions and pitching short equity in a growth geography doesn't pitch well to most even if its correct). Obviously you can reach out to headhunters, but if you are ER, the question is: WHO ARE YOUR CLIENTS? Moving to the client side directly is the most direct and easiest way because they know you and your work and that's the best interview. If you haven't started, it may be wise to start getting to know them. Get drinks, go to the gym, join a club. Get to know each other aside from work. On places like Citadel, every HH works with them and they have their own recruiters.. Knowing individual PMs at those places helps since they can just hire you on.

TLDR: network.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
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Jun 5, 2019 - 8:15pm

Thank you so much. Just a few questions. As you said "Moving to the client side directly is the most direct and easiest way because they know you and your work and that's the best interview.". In sell side ER however usually you are not going to have your own coverage until you made VP. So in the first few years, even if say your boss is kind enough to take you to client meeting you are probably not going to have your own "work" to market anyway. Thus do you suggest to start looking for hf potion after one have their own coverage? I do hear people say that if you want to move to buy side you need to move early and if you stay at sell side for several years you are probably going to stay in sell side in the long run. And I assume one also need to be careful as it is a small world once you start interviewing your boss will probably find out soon (especially if I have to take a day off to fly to HK from SG)? Do you mind also talking a bit about the competitive landscape for hf hiring in Aisa? Is hiring active? Are they willing to take people in from sell side ER? And also I know the compensation in hf would be by and large performance driven but since there is almost no data on this at all I am wondering if you can shed some light on hf compensation in Asia. Thanks.

Jun 6, 2019 - 12:33pm

I'm sure that you email clients right, even if not your commentary, but like models or stuff that they ask for with updates later in the day when your boss can't be bothered? If not I am sure that you are on those email chains. And if not that I am sure you know who your clients are since people will talk about them on the floor. Are any of them in Singapore? Look them up, email them for a drink/coffee "to get to know them" or join some social stuff so that you'll meet them organically. The first step is getting to know them rather than asking or a job. Get to know them as actual people. Talk some shop. Be likeable and well versed in your stuff with some ideas. Then when you hear they may be expanding...

On people talking, I spent years worrying about this. It was stupid of me.

  1. Everyone is always talking and looking out for their career and the next move. It's finance. Yes even your boss. If he/she isn't, they certainly have before or have been approached before.

  2. Flying up to HK? Maybe take some vacation days after building a network of contacts and meetings. You don't have to tell anyone where you are going. If people see you, so what? You know x and y socially or just "wanted to catch up and chat sports or whatever" since you had some free time in HK after doing museums/hiking/partying on your VACATION... Also on intervies, usually people will do calls for at least a few rounds and SG is not the end of the Earth. It's a pretty major place in Asia.

If you want the job you are going to have to make the first move and can't be passive about it.

Can't comment on comp or cycles or whatever since I don't know. Best to ask headhunters. Have you spoken to any by the way? Most are a waste of time but they will be plugged to like Citadel and know comp.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
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Jun 6, 2019 - 7:42pm

Thanks a lot for the reply. I haven't started the job yet. I do have another offer in New York doing market risk management at a BB. Hours would be fantastic, i.e., 8.30 am -6 pm everyday with people leaving at 5 pm on Fridays. Base for analyst/asso/VP start at 80k/125k/175k USD with a 10%-ish bonus (up until VP standard promotion is almost guaranteed). D/MD all in comps should be between 200k-400k/400k-1m respectively, although not everyone can make it to D/MD and even if you do would probably need to wait for a long time. Exit would probably be limited to risk (risk at another bank/buy side risk/risk advisory) and to a lesser extent quant research. I am wondering if you have any suggestion with regarding to comparing this with a ER job at a BB in SG? I am really concerned if I will be working significantly more hours but not making significantly more and losing a US greeen card down the road. Thanks in advance.

Jun 8, 2019 - 12:28am

I think you are now asking questions that I cannot answer. This pertains to you and what YOU want. Not me. I have no idea what you want, and so any answer I would really give could (and probably will) be the wrong one.

From what you say above:

Market risk gig, less comp, great hours, maybe more stable? Work/Life balance. Green Card. Less big money exit potential (you seem to overlook potentially networking within the bank of the risk you are supposed to manage and may be able to move to that side?

ER at BB in SG: More pay, probably more hours, facing clients/trading/investing side that you seem more interested in, much less work life balance and potential loss of Green Card. You seem to ignore that commissions are way down on equity trading and that research does not generate revenue for a bank (or hasn't typically - banks may charge for it now but I'm not sure how much).

I'm not sure how you value the green card or work life balance or pay or potential to be on the buy side. Only you may know that (you may not and the answer you have today may change tomorrow, and THAT'S TOTALLY NORMAL/HUMAN). The other thing on exit that you have not mentioned and should be aware of is that through networking, self education and advanced study (MBA etc), you can change path. It will take time/effort/energy/rejection but it can and does happen.

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
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