Global view on Asian private markets: Strategies for the future
Private equity investors are adjusting their strategies in response to a new normal characterised by macroeconomic uncertainty, geopolitical tensions, a higher cost of capital, and a lack of liquidity. The process of picking winners hasn’t changed, but the dynamics around it have – leading to tweaks in geographic and sectoral focus. Industry leaders explain what’s the same and what’s different.
- How does geopolitics impact investment strategy?
- Have valuation expectations adjusted enough to stimulate more deal flow?
- To what extent are managers pursuing alternative sources of liquidity?
- What issues keep GPs awake at night?
Southeast Asia spotlight: Staying the course
Southeast Asia is not immune to the headwinds affecting the industry, but the region can counteract this thanks to a couple of tailwinds. First, a combination strong growth characteristics, attractive demographics, and relative geopolitical stability. Second, an influx of industrial capacity arising from the reorientation of supply chains to manage China risk. GPs share their outlook for the region.
- Country vs regional funds – what is the best way to access Southeast Asia?
- Are managers in the region receiving allocations that previously went to China?
- Has Southeast Asia private equity met expectations in terms of performance?
- What are the prospects for exits over the next 12 months?
Portfolio management: Shifting strategies
Assets with operational risk are being held for longer as private equity investors reassess exit options and look for additional ways to drive alpha in challenging conditions. This has led to increased focus on building sector and operational capabilities, close collaboration with management, and the need to act decisively on cost controls and strategic adjustments. Industry experts compare playbooks.
- Will value creation be the key performance differentiator in the near term?
- What represents best-in-class in terms of internal operational capabilities?
- How can GPs leverage technology tools like artificial intelligence?
- What is the key to effective communication with management teams?
Venture capital: Overcoming adversity
Venture capital in Asia is facing a reality check following a long run of valuation upticks, headline liquidity events, and increased support from institutional investors. Now is the time for leading managers to demonstrate strategic differentiation and the ability to maintain line of sight on exits despite external challenges. Early-stage investors discuss how to navigate a maturing yet far-from-straightforward ecosystem.
- How deep are valuation corrections across different stages and markets?
- What can GPs do to help portfolio companies beyond burn rate management?
- Which paths to liquidity will be easiest to navigate over the coming 24 months?
- Where are the biggest generative AI-driven opportunities in Asia?
India: Asia’s new sweet spot?
Asked how this generation of Indian private equity is different to the last, managers often highlight the rollout of robust physical and digital infrastructure. To this can be added attractive economic growth prospects, burgeoning capital markets, and a rich seam of returns – already partly realised – in areas like IT services. Investors consider the rewards and risks of Asia’s hottest market.
- Are India’s fundamentals strong enough to withstand global headwinds?
- How are investors approaching cross-border deals?
- Will domestic IPOs be the dominant exit channel in the near term?
- Can local investors become significant LPs in private equity?
Energy transition: Embracing the green economy
With trillions of dollars earmarked for investment as part of efforts to meet global emissions reductions targets, private equity players are looking for ways to access energy transition. The impact is widespread. For all the focus on renewables, energy storage, and automotive electrification, countless companies in traditional industries stand to benefit from sustainability-oriented upgrades. Investors map out a once-in-a-generation opportunity.
• What is the risk-return profile of energy transition?
• How are private equity firms upskilling themselves to address the market?
• Does energy transition warrant separate funds and mandates?
• How are investors approaching less proven areas like alternative fuels?
Strategic partners: The rise of family offices
Family offices represent an attractive target for private equity – a consequence of growing private wealth in Asia and increased familiarity with the asset class. They vary hugely by resources and risk appetite, which means relationships are hard to cultivate. GPs must not only be targeted in their outreach, but also open to tailoring structures and reporting to meet client needs.
- Are private wealth platforms the best way to access family offices?
- How can GPs overcome reluctance to participate in blind pool funds?
- What is the key to building and maintaining strategic relationships?
- What does Singapore’s evolution as a family office hub mean for private equity?
Day one close and cocktails
Private markets in China: Bigger the challenge, bigger the opportunity
Geopolitical concerns and challenging macro environment had significant impact on activity in Chinese private equity. However, with challenges also comes an opportunity and savvy investors can find good assets at more reasonable valuations, especially in healthcare, energy transition, manufacturing, and the digital economy. The opportunity is further enhanced by expansion into the region by increasing number of GPs and their portfolio companies. Our panel of investors will share their views on the current investment landscape in China and discuss their strategies for the year ahead.
• What is the current state of play and how have private equity investment strategies changed?
• What sectors are proving resilient and where is the growth coming from?
• Are we now seeing more LPs from the Middle East and other regions selectively allocating to China?
• How are GPs navigating the challenging exit environment?
Exits: The path to liquidity
Sluggish exits have restricted distributions, making LPs unable or unwilling to back new funds. With IPOs and M&A channels obstructed, sponsor-to-sponsor sales have come to the fore. Beyond that, GPs are exploring alternative sources of liquidity, with continuation vehicles, cross-fund transactions, and NAV financing increasing on the agenda. GPs and LPs give their take on how best to realise returns.
- Sponsor-to-sponsor sales led the way in Asia in 2023. Will it be the same in 2024?
- Which jurisdictions are most attractive for PE-backed IPOs?
- What is the demand-supply dynamic behind single-asset continuation funds?
- How are investors addressing conflicts of interest tied to alternative liquidity?
Private credit: Betting bigger
Private credit investors are proving to be beneficiaries of prevailing market conditions as rising interest rates improve the risk-return of fixed income. Meanwhile, companies are increasingly turning to alternative lenders as banks pull bank and downward pressure on valuations means equity capital raising is delayed. LPs must the managers and strategies that best fit their needs in a diverse ecosystem.
- Which jurisdictions offer the strongest private credit proposition?
- What happens if there is an uptick in defaults by borrowers?
- How does downside protection vary across different markets?
- What should LPs be mindful of when making allocations to private credit?
Asian LPs: Adapting to a new reality
Asia’s LP pool is deepening – institutional players are growing in size and sophistication; family offices and private wealth channels are increasingly accessible – yet market conditions are to some extent constraining commitments. Given concerns about performance and a widespread desire for more concentrated portfolios, manager selection has never been more important. Seasoned investors explain where they are putting their money and why.
- Have terms and conditions re-aligned to the benefit of LPs?
- Which geographies and strategies are most popular in 2024?
- How does LP maturity and type influence portfolio priorities?
- Have LPs re-written pacing models and assumptions on returns and distributions?
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