Investment Capital, Private Equity Is an Increasingly Complex and Competitive Business in China

Asia’s Private Equity News Source avcj.com December 10 2013 Volume 26 Number 47-48

Editor’s Viewpoint HK PE community sees value in lobbying Page 3 News Actis, Apollo, Blackstone, Carlyle, IL&FS, Sequoia Page 5 A VCJ forum Event highlights Page 26 Deal of the week CITIC Capital leverages China’s LNG boom Page 28 Industry Q&A Bain Capital’s Dwight Poler on Asia and Europe Page 29 profile Rising tide in 2014? Henry Nguyen of IDG Ventures Vietnam AVCJ reviews 2013 and looks at what is in store for the year ahead Page 11 Page 31

India awards deal of the week

AVCJ India Awards A cut above the rest Wins for Baring Asia, SAIF India, KKR, Apax Page 8 L Capital Asia backs sportswear brand 2XU Page 28

Double issue Happy holidays to all our readers. AVCJ will return January 7, 2014 With many new regulations and an abundance of investment capital, private equity is an increasingly complex and competitive business in China. You need to work with professionals who understand your business and can help you stay ahead of the game.

KPMG has a dedicated Private Equity Group in China organised with your needs in mind. With skills across Audit, Tax & Advisory and a network covering 13 office locations throughout China, we can tailor our services to assist you throughout the entire investment cycle.

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For more information, please contact: Honson To: +86 (10) 8508 7055; [email protected] David Xu: +86 (10) 8508 7099; [email protected] Jon Parker: +852 2140 2816; [email protected] kpmg.com/cn

© 2013 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China and KPMG Huazhen (Special General Partnership), a special general partnership in China, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. Editor’s Viewpoint [email protected]

Managing Editor Tim Burroughs (852) 3411 4909 Staff Writers Andrew Woodman (852) 3411 4852 Mirzaan Jamwal (852) 3411 4821 Finding a voice Winnie Liu (852) 3411 4907 Creative Director Dicky Tang Designers Catherine Chau, Edith Leung, “When AIFMD came out in draft form encourage funds to domicile locally). Mansfield Hor, Tony Chow a couple of years ago we engaged the Hong When asked to name the credentials for Senior Research Manager Kong government to participate in the process making a fund hub successful, a favorable tax Helen Lee of seeking comment,” David Pierce, a partner at regime ranked first, followed by a friendliness Research Manager Alfred Lam FLAG Squadron Asia and until recently non- and clarity of the regulatory framework, cost Research Associates executive chairman of the Hong Kong Venture competitiveness and the availability of financial Herbert Yum, Isas Chu, Capital and Private Equity Association (HKVCA), intermediaries. Respondents gave similar answers Jason Chong, Kaho Mak told AVCJ earlier this year. “I believe it was the as to what are the key factors in attracting Circulation Manager association’s first attempt to influence and help international and Chinese funds to Hong Kong. Sally Yip Circulation Administrator the government understand our industry. Before While 61% are encouraged by the Prudence Lau that we weren’t really on their radar.” announcement in this year’s budget statement Subscription Sales Executive Jade Chan The Alternative Investment Fund Managers that the profits tax exemption for offshore Directive has provoked uncertainty in Hong Kong funds would be expanded to include private Manager, Delegate Sales Pauline Chen because of the implicit questions it asked about equity, they think the rules are unclear and the how PE is regulated and whether this would government has yet to offer further guidance. Director, Business Development Darryl Mag impact GPs’ ability to market to EU investors. By extending the tax exemption, PE firms with Manager, Business Development Those selling to Hong Kong investors or funds domiciled offshore would no longer have Anil Nathani, Samuel Lau offering financial products subject to separate to set up structures designed to avoid triggering Sales Coordinator oversight were regulated, but more than half of permanent establishment in Hong Kong and Debbie Koo the HKVCA’s membership base was not. Although becoming liable for local tax. It should also make Conference Managers a number of Hong Kong-based PE firms have it easier to access the tax treaty network. Funds Jonathon Cohen, Sarah Doyle, chosen to register with the Securities & Futures must meet local substance requirements to Zachary Reff Conference Administrator Commission (SFC), the regulator’s response was qualify for treaty benefits and this could be done Amelie Poon limited: why should it take responsibility for funds without risking local tax liability. Conference Coordinator that are domiciled offshore with nothing more The FSDC proposals offer a degree of clarity, Fiona Keung, Jovial Chung than an advisory presence in Hong Kong? specifying that the exemption would apply to Publishing Director Allen Lee The association’s technical committee has offshore special purpose vehicles controlled emerged as a means of engagement with by funds as well as the funds themselves and Managing Director Jonathon Whiteley regulators. It collaborated with the Financial identifying particular circumstances in which Services Development Council (FSDC) on funds would not qualify for the exemption. recently released proposals intended to However, regulation has yet to be resolved. introduce a relevant framework to attract more The FSDC proposes that the exemption only Incisive Media funds to the territory. applies to managers licensed by the SFC and Unit 1401 Devon House, Taikoo Place Last week the Hong Kong Private Equity there is no mechanism allowing unlicensed 979 King’s Road, Quarry Bay, Hong Kong Finance Association (HKPEFA) also entered the managers to benefit as well. Then there is the T. (852) 3411-4900 fray. This association is primarily for CFOs, COOs, longer-term objective of updating limited F. (852) 3411-4999 E. [email protected] controllers, accountants, administrators and partnership legislation so that funds could fully URL. avcj.com legal counsels in the PE community. Its remit domicile in Hong Kong. Beijing Representative Office is broad, taking in everything from education Lobbying is a relatively new phenomenon in No.1-2-(2)-B-A554, 1st Building, No.66 Nanshatan, to networking, but these people are intimately Asian private equity (Australia is the exception). Chaoyang District, Beijing, familiar with the regulatory obstacles to the Regulation of the industry globally has initially People’s Republic of China T. (86) 10 5869 6203 territory becoming a top asset management hub. been addressed by groups in Western markets, F. (86) 10 5869 6205 The HKPEFA released an industry survey to but managers have an interest in the outcome E. [email protected] coincide with its inauguration that touched on almost regardless of geography, making several of these issues. engagement with local stakeholders vital. There Nearly 80% of respondents said Hong Kong is plenty for Hong Kong’s industry associations to The Publisher reserves all rights herein. Reproduction in whole or in part is permitted only with the written consent of is the best place for PE and VC firms to build get their teeth into. AVCJ Group Limited. a presence if they are targeting outbound ISSN 1817-1648 Copyright © 2013 investments from mainland China. Nearly two thirds don’t think Hong Kong is doing enough to promote its usefulness in this regard, with 71% Tim Burroughs saying the territory is losing its competitive edge Managing Editor (just as Singapore upgrades its infrastructure to Asian Venture Capital Journal

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 3 Headland Capital Partners has been advising private equity funds since 1989. The ﬁrm endeavors to bring to its partner companies and fund investors the experience and insights gained from completing over 100 middle market investments, primarily in Greater China, South Korea and Southeast Asia. Headland is currently advising its sixth private equity fund with over US$1.3 billion in capital commitments. News

Indian GPs emphasize IPO price. The company earlier sold 156.6 million Global shares to raise A$344.5 million ($312 million). value-add - AVCJ Forum Anchorage sold 50.7 million shares, generating Actis raises $1.15b for Operational involvement is increasingly a priority A$111.5 million as its stake fell from 98% to 20%. for Indian private equity firms as new money global energy fund slowly trickles into country-focused funds, GPs Actis has closed its third global energy fund - said at the AVCJ India Forum. “The acceptance is Greater China Actis Energy 3 - at $1.15 million, exceeding its also much higher,” said Archana Hingorani, CEO of original $750 million target by 50%. The fund will IL&FS Investment Managers.”Ten years ago if you MSPEA in take private bid invest in electricity generation and distribution tried to contribute, the promoter would not listen businesses in Asia, Latin America and Africa. but it’s much easier today”. for Sino Gas Discretionary co-investment capital of $262 Morgan Stanley Private Equity Asia (MSPEA) is million is also available. supporting a management buyout of Sino Gas International Holdings that values the US-listed Alastair Morrison to depart Chinese gas distributor at approximately $15.9 million. MSPEA and Yuchuan Liu, Sino Gas’ Standard Chartered PE chairman, CEO and president, are offering to pay Alastair Morrison, who was co-head of Standard $0.50 per share. Chartered Private Equity (SCPE) until earlier this year, will retire from the firm at the end of the Blackstone buys 49% stake month. Earlier this year Morrison stepped back to become vice chairman of Standard Chartered’s in China Franshion unit principal finance division. Nainesh Jaisingh now The Blackstone Group has bought a 49% stake in shares his duties with Wei Zhu, previously head of Enhanced Experience, a wholly-owned subsidiary China. The move is said to be independent of the While GPs are spending more time working of Hong Kong-listed Franshion Properties, for restructuring taking place within SCPE that will with portfolio companies, there also needs to $128 million. The new capital will be used to reduce overall headcount to about 100. be a greater focus on certain sectors, since India develop a mixed-use commercial real estate is a diversified market and a firm cannot have a project in China. EIG raises $6b for global partner for every sector. Unlike the boom years when there were 15-20 GPs bidding for every Carlyle, Farallon support energy fund asset, there are now about 6-8 other bidders with EIG Global Energy Partners has reached a final capital, according to Gulpreet Kohli, managing funeral company IPO close of $6 billion for its Energy Fund XVI after just director at ChrysCapital Partners.”You can do 2-4 The Carlyle Group and Farallon Capital 10 months in the market. The fund had a target deals at reasonable pricing if you’re patient,” he Management will commit $35 million as of $4.25 billion. said. In terms of preferred strategies, PIPE deals cornerstone investors in Fu Shou Yuan have yielded good results and more GPs are likely International’s $215 million Hong Kong IPO. The to include them in fund strategy. funeral service provider is offering 500 million Australasia “Our view is that firms will ask for more new shares at HK$2.88-3.33 apiece. flexibility when they are fundraising,” Kohli added. Australian taxi app Ingogo “India is pro-cyclical and Indian entrepreneurs SDCL launches UK-China gets funding, eyes listing raise money at the peak of the market.” energy efficiency fund Ingogo, the Australian start-up behind the UK-based Sustainable Development Capital LLP mobile taxi-booking app of the same name, PE-backed Nine raises (SDCL) has teamed up with with Hong Kong has raised a A$3.4 million ($3.1 million) from a private equity firm First Eastern Investment group of PE investors ahead of a domestic listing $577m in Australia IPO Group to launch a $200 million fund that will next year. The investment - which values the Australia’s Nine Entertainment - which was invest in energy efficiency projects in the UK and enterprise at A$25 million - came from 14 backers saved from receivership by US hedge fund China. The fund will be managed by SDCL Asia - a including private equity fund Wilbow Group, and backers Oaktree Capital Group and Apollo Global joint venture between SDCL and First Eastern UBS Australian Small Companies Fund. Management - raised A$631 million ($576.45 million) after pricing its IPO at the bottom end North Asia APN agrees to exit of the indicative range. It is the country’s largest advertising JV to Quadrant PE-backed offering this year. VC-backed Oncolys Pharma APN News & Media has agreed to exit its interest Dick Smith closes flat after in advertising business APN Outdoor to joint raises $64m in Tokyo IPO venture partner Quadrant Private Equity for A$69 $311m IPO Oncolys Pharma, a VC-backed developer of drugs million ($66.5 million). The two groups entered Anchorage Capital Partners-owned electronics targeting cancer and serious infectious diseases, into exclusive negotiations in October and have retailer Dick Smith Holdings saw its stock close saw its stock open at JPY3,500 per share - a 34.6% now signed long-form legal documentation. at A$2.20 on its trading debut, the same as the premium on the offering price - on its first day

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 5 News

of trading in Tokyo. This followed a JPY6.6 billion PE-backed Alibaba, Haier Invus Group buys stake in ($64.4 million) IPO. The price peaked at JPY3,750 before eventually closing at JPY3,530 on Friday. to launch logistics JV India’s Capital Foods PE-backed Alibaba Group will invest a total of Invus Group and Artal have bought a 43.5% Tokio Marine to launch HK$2.8 billion ($360 million) in Haier Electronics stake in Indian processed foods company Capital Group, a Hong Kong-listed subsidiary of Chinese Food for INR1.8 billion ($29.5 million) from Future $294m mezz fund home appliance maker Haier Group, to expand Consumer Enterprises (FCEL), formerly known as Tokio Marine & Nichido Fire Insurance is to launch its logistics and distribution network. Haier Future Ventures. a new mezzanine fund with a target of JPY 30 Electronics is backed by The Carlyle Group. billion ($294 million). The Japanese insurer will Of the total amount, HK$1.86 billion will be Sequoia-backed Citrus commit JPY10 billion to the fund and will raise invested to establish a joint venture, known as the remainder from institutional investors. Goodaymart, according to a statement. Alibaba Payment raises $5.5m will pick a 9.9% stakes of Goodaymart for HK$541 Citrus Payment Solutions has raised a $5.5 million Korea to broaden retail million. It will also subscribe to convertible Series B round from Japanese investors econtext bonds issued by Haier Electronics worth HK$1.32 Asia, an online payments company, and Beenos. exposure to domestic PE billion. These bonds can be converted into Existing investor Sequoia Capital also participated South Korean regulators will make it easier for shares in Haier Electronics or into a 24.1% stake in in the round. domestic retail investors to participate in PE as Goodaymart. Furthermore, Alibaba will subscribe part of a series of reforms designed to boost to HK$965 million of new shares issued by Haier the country’s capital markets. The measures, Electronics, equating to an approximately 2% Southeast Asia announced by the Financial Supervisory stake in the company. Commission (FSC), will enable a wider range of SE Asia online retailer individual investors to get exposure to private equity through mutual fund products. Lazada raises $250m Rocket Internet’s Southeast Asian online Tokio Marine exits Barneys shopping mall, Lazada, has raised a $250 million round of funding from Tesco, Access Industries, Japan to 7 Eleven parent and return backers Investment AB Kinnevik and Tokio Marine Capital Partners has agreed to Verlinvest. Launched in March 2012, Lazada sell its 49.9% stake in luxury department store operates in Indonesia, Malaysia, the Philippines, operator Barneys Japan to Seven & i Holdings, Thailand and Vietnam. Also this week, Rocket’s the parent of 7 Eleven convenience stores and Carlyle invested up to $194 million in Haier Zalora Group has raised $112 million from department store operator Sogo & Seibu, for Electronics in 2011, taking an approximately US-based Access Industries, Scopia Capital around JPY6 billion ($58 million). 9% stake in the company. Two months ago Management and other unnamed institutional KKR acquired a 10% stake in Qingdao Haier, investors. Southeast Asia-focused Zalora.com and Jafco Asia leads Series B for the Shanghai-listed parent company of Haier Australia’s The Iconic are part of Zalora Group. US games developer Electronics, for RMB3.38 billion. Alibaba is backed by a string of private equity firms following an Standard Chartered PE re- Japanese VC investor Jafco Asia has led a Series employee liquidity event in 2011 and a partial B round of funding for US games developer buyback from Yahoo in 2012. ups in Navigat Playnery. Set up in 2011, Silicon Valley-based Standard Chartered Private Equity (SCPE) has Playnery develops 3D optimized social games. invested an additional $25 million in Navigat, an Management are reportedly investing INR9.6 Indonesian company that develops independent Japan’s Ride On Express billion ($157 million) in Avantha Holdings, the power systems for off-grid locations. The equity holding company of the $4 billion conglomerate commitment came in conjunction with a $279 raises $23m in Tokyo IPO Avantha Group. Avantha is also in talks to raise million debt refinancing and the combined Ride On Express, a Japanese food delivery $100 million from KKR, an existing investor in the proceeds will be used to accelerate Navigat’s franchise operator backed by Jafco Ventures, group’s Avantha Power & Infrastructure business. plan to achieve 1,000 megawatts of operating saw its stock open at JPY3105 per share - a 55% capacity by 2015. premium on the offering price - on its first day of Matrix provides Series A for trading. The company earlier raised JPY2.3 billion SCG offers $111m for ($22 million) through a Tokyo IPO. traffic information portal Matrix Partners India has provided a Series A university operator round of funding for real-time traffic and travel Southern Capital Group (SCG) has made a South Asia information platform Birds Eye Systems. The size buyout offer for HELP International Corp, a of the investment was not disclosed but the listed Malaysianuniversity operator, valuing the Aion, Apollo to invest in capital will be used to expand the company’s company at MYR359.3 million ($111.4 million). coverage from Mumbai, New Delhi and The PE is willing to pay MYR2.53 per share for all Avantha Holdings Bangalore to other cities and to multiple modes outstanding shares, a 10.5% premium to the last Aion Capital Partners and Apollo Global of transport. trading price.

6 avcj.com | December 10 2013 | Volume 26 | Number 47-48 When liquidity is your ﬁrst choice, make Lexington your secondary choice.

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New York Boston Menlo Park London Hong Kong New York Boston Menlo Park London Hong Kong 212 754 0411 | 617 247 7010 | 650 561 9600 | 44 20 7318 0888 | 852 3987 1600 212 754 0411 | 617 247 7010 | 650 561 9600 | 44 20 7318 0888 | 852 3987 1600 www.lexingtonpartners.com www.lexingtonpartners.com India awards [email protected] Baring Asia wins Firm of the Year at AVCJ India Awards Fourth AVCJ India Awards: SAIF India’s Adusumalli named PE Professional of the Year; KKR claims Private Equity Deal of the Year; Apax and Kedaara win exit and fundraising prizes

baring private Equity Asia was named Firm of the Year at the 2013 AVCJ India Awards, while SAIF India’s Ravi Adusumalli won the Private Equity Professional of the Year honor and THE WINNERS KKR took the PE Deal of the Year prize. Baring Asia made investments of more than $650 million across two deals - a buyout of Firm of the Year - Baring Private listed IT and business process outsourcing firm Hexaware Technologies, acquiring over 71% Equity Asia for around INR25.5 billion($400 million), and 14% stake in building materials maker Lafarge India for INR14 billion ($256 million). Private Equity Professional of the KKR’s acquisition of tire manufacturer Alliance Tire Group (ATG) in March 2013 is the Year - Ravi Adusumalli (SAIF India) firm’s largest in India since it established a local operation in 2008. The GP reportedly paid around $470 million for a 75% interest and assumed $125 million in debt. KKR committed Exit of the Year - Apollo Hospitals $300 million in equity from its first Asia fund, with Crescent Capital Group Ivy Funds’ Ivy High (Apax Partners) Income Fund providing the remainder through a mezzanine financing tranche. Ravi Adusumalli’s PE Professional of the Year accolade came in recognition of his team Private Equity Deal of the Year - returning a reported $200 million to LPs over the last 12 months, with a full exit from IT Alliance Tire Group (KKR) services provider CSS Corp. and a partial exit from Just Dial - and a more than 15x return - as the firm went public. Venture Capital Deal of the Year - Exit of the Year went to Apax Partners which generated proceeds in excess of $350 Snapdeal (eBay/Intel Capital/Saama million for a money multiple of more than 3x on its investment in Apollo Hospitals, one of Capital/ru-Net/Recruit Holdings/ India’s largest healthcare chains. The firm is said to have invested around $117 million in Nexus Venture Partners/BVP/Kalaari listed Apollo since 2007 and then sold down its interest through a series of public market Capital) transactions, most of which took place earlier this year. Kedaara Capital won the fundraising prize for its debut $540 million fund, one of the Fundraising of the Year - Kedaara largest first-time India vehicles ever raised. The process took about 17 months and exceeded Capital I (Kedaara Capital) the $500 million target. Ontario Teachers’ Pension Plan is anchor investor in the fund, with Temasek Holdings and Abu Dhabi Investment Authority (ADIA) among the others reported to be participating. Former Temasek India head Manish Kejriwal set up the firm at the end of in 2011 alongside Sunish Sharma, formerly managing director at General Atlantic, and Nishant Sharma, formerly of General Atlantic and McKinsey & Company. “It is all about the team and our approach,” said Manish Kejriwal, Kedaara’s co-founder and managing partner. “We developed a clear strategy on what we wanted to do. It’s also a team that is complementary, and which has worked together for 15 years. We have developed a unique approach in partnering with leading CEOs like Sanjeev Aga and Pramod Bhasin to execute control transactions, in addition to doing minority investments in high growth companies.” Snapdeal won Venture Capital Deal of the Year Award for a $50 million round of Series C funding, which featured eBay, Intel Capital, Saama Capital, ru-Net, Recruit Holdings, Nexus Venture Partners, BVP and Kalaari Capital. The round was said to value the online marketplace at $280 million. Kalaari and Nexus provided the Series A round in January 2011. Snapdeal is targeting $1 billion in annual gross merchandise value by 2015.

8 avcj.com | December 10 2013 | Volume 26 | Number 47-48 India awards [email protected]

Manish Kejriwal of Kedaara Capital, winner of Fundraising of the Year

SAIF India’s Deepak Gaur (right) accepts the PE Professional of the Year award on behalf of Ravi Adusumalli from Bhogle and Shearman & Sterling’s Sidharth Bhasin

Cricket commentator Harsha Bhogle (left) presents the PE Deal of the Year award to KKR’s Hermab Hajarnavis

The Baring Private Equity Asia team receive the Firm of the Year Award from Bhogle and Bhasin

Jimmy Mahtani, managing director and head of India at Baring Private Equity Asia

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 9 Recognized for Excellence

Global REach and a woRld oF ExpERIEncE For over two decades, we have been helping private equity firms, sovereign wealth funds, pension funds and family offices in their 2014 investments in India and around the world. Recommended Firm ‘“we have had an exceptionally good experience with Shearman & Sterling,” says one client from a global multi-stage fund. They always deliver high quality work in a timely fashion and we now work exclusively with them.”’ — India Business Law Journal, 2013

conTacTS Sidharth bhasin Partner | Hong Kong e: [email protected] t: +852 2978 8062

FUNDRAISING: SIZE isn’t necessarily shrinking on a dollar basis – on a months and Affinity Equity Partners has reached smaller number of managers. Those that haven’t its $3.5 billion target almost as quickly but has EQUALS COMFORT performed are getting culled; those just entering yet to formally announce the fact. In contrast, the market without a track record of performance TPG Capital and The Carlyle Group have been The flight to quality continues in are lucky to get a second look. The net result is a in the market for more than 18 months and are Asia as LPs stick with tried and hollowing out of the middle market as large LPs now not expected to close until early next year. back managers able to absorb their minimum Fundraising targets are being revised downwards. tested partners, but there are still check size and smaller investors, often the ones But appetite for the mega-funds remains opportunities for managers that with the least experience and exposure to Asia, in comparatively rude health. Three vehicles of play it safe with established names. $2 billion or more have reached a final close in carve out the right niche There is evidence of a division within the 2013 and Affinity will make that four. Only once mega-fund bracket. KKR closed its second pan- in the preceding four years has this figure been Remove China from the equation and Asian fund at $6 billion this year, MBK Partners topped – in 2011, when one of the five was a Recognized for Excellence Asia private equity fundraising is – according raised $2.7 billion in the space of about 12 government-backed vehicle. to the headline numbers – little changed. A few weeks from the end of 2013, capital Asia private equity fundraising committed to funds in the region stands at $24.4 billion, down slightly on the full-year totals for 80,000 2012 and 2011 and up slightly on 2010. The differential between highest and lowest is less 60,000 than $4 billion. Yes, the peak of 2007 remains a Global REach and a woRld oF ExpERIEncE world away, but the past four years have been For over two decades, we have been helping private equity firms, reasonably consistent. 40,000 sovereign wealth funds, pension funds and family offices in their China was the change agent and one glance US$ million investments in India and around the world. at the fundraising chart says it all: streaking from 20,000 2014 a paltry $10.5 billion in 2009 – still the low point nationally and regionally – to $26.3 billion in Recommended Firm 0 2010, then $53.5 billion the following year; before 2007 2008 2009 2010 2011 2012 2013YTD ‘“we have had an exceptionally good experience with sinking to $27.1 billion in 2012 and $13.6 billion so far this year. The hemorrhaging has been most Rest of Asia China-USD China-RMB Shearman & Sterling,” says one client from a global brutal among the renminbi-denominated funds. Source: AVCJ Research While in 2011 they accounted for more than 40% multi-stage fund. They always deliver high quality of regional fundraising, in 2013 it is 30%. However, the headline numbers only tell part work in a timely fashion and we now work exclusively Asia nal closes by fund size of the story; there are two specific trends that with them.”’ warrant attention. First – and we’ve said it before 120 but all the evidence suggests it is becoming — India Business Law Journal, 2013 more entrenched – is a flight to perceived quality. 100 These perceptions vary depending on the LP 80 but for many comfort equates to size and brand name. A number of the very large institutional 60 conTacTS Funds investors are encumbered by the amount of Sidharth bhasin 40 capital they must deploy each year to maintain Partner | Hong Kong their target allocation. If that amount is $10 20 e: [email protected] billion and the LP is unable to account for more 0 t: +852 2978 8062 than 10% of a single fund, the commitments 2007 2008 2009 2010 2011 2012 2013YTD of $1 billion or below are challenging for small US$2b and above US$500-999m US$199m and below teams. US$1-1.99b US$200-499m ABU DHABI | BEIJING | BRUSSELS | FRANKFURT | HONG KONG | LONDON | MILAN | NEW YORK | PALO ALTO And the vast majority of LPs, regardless of Source: AVCJ Research PARIS | ROME | SAN FRANCISCO | SÃO PAULO | SHANGHAI | SINGAPORE | TOKYO | TORONTO | WASHINGTON, DC size, want to concentrate their allocation – which shearman.com

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 11 This announcement appears as a matter of record only.

November 2013

$2,677,000,000

MBK Partners Fund III, L.P.

Buyouts in Greater China, Japan and Korea.

Credit Suisse Asset Management Limited acted as advisor and exclusive placement agent.

k&5(',768,66(*5283DQGRULWVDIƟOLDWHV$OOULJKWVUHVHUYHG Review of the year [email protected]

Move into the lower tiers and the picture It is, of course, still possible for small and mid- shares some similar characteristics but 2013 has changes markedly. There have been two final cap managers to raise money. Success hinges seen final closes in the region of $500 million closes in the $1-1.99 billion range, down from on combining a strong track record – first-time by Anchor Equity and H&Q. And then MBK will seven in 2012 and eight in 2011. Between $500 funds are favored when operated by people deploy about one third of its corpus in the million and $999 million, AVCJ Research has who are not first-time investors or first-time country. records of eight successful fundraises in 2013, teammates – with a compelling investment Southeast Asia also has some emerging compared to 13 and 21 in the two previous thesis and a degree of differentiation from the stars, even though the market remains relatively years. In the $200-499 million and sub-$199 norm. Specialization is no longer a dirty word in shallow and the handful of larger GPs haven’t million ranges, final closes stand at 15 and 16, growth capital markets; plain vanilla is. closed funds in the past 12 months. Southern respectively, less than half the 2011 figures and In this context, the other interesting trend Capital closed its third fund above target at $400 the lowest totals in nine years. is where these pockets of opportunity, typically million after reining in its strategy to focus purely In 2007, when Asia fundraising reached its funds that have a particular strategy within a on Southeast Asia mid-market buyouts. First- pre-global financial crisis peak of $62.9 billion, particular geography, are perceived to lie. timers KV Asia and Creador also gained traction, 24 funds reached a final close of $500 million or While the likes of Boyu Capital will raise capital albeit with smaller sums than they had hoped, more, 46 finished in the $200-499 million range quickly, many China managers are struggling while Armstrong Asset Management and Quadria as investor sentiment are new specialist plays, targeting cleantech and Largest final closes by independent GPs, 2013 weakens. This is not a healthcare, respectively. mass withdrawal so Target Capital raised much as a strategic Fund name Market (US$m) (US$m) reassessment in INVESTMENT: KKR Asian Fund II Asia 6,000 6,000 response to returns EMERGING BUYOUTS RRJ Capital II Asia/global 5,000 3,500 in recent years not MBK Partners III North Asia 2,250 2,700 being quite as strong South Korea – and to a certain as initially hoped. L Capital Asia II* Asia 800 950 LPs are looking to extent India – establish themselves Macquarie Everbright Greater China 1,500 870 broaden their exposure China Infrastructure Fund as interesting buyout destinations across the region as Tata Opportunities Fund India 1,000 600 demonstrated by as growth deals struggle due to exit Kedaara Capital I India 500 540 the sharp drop in US uncertainty H&Q AP Korea Fund III South Korea 532 532 dollar-denominated China fundraising – it Only three of Asia’s major private Anchor Equity Partners Fund I South Korea 500 500 stands at $2.2 billion, equity markets have seen stronger deal flow in Southern Capital Fund III Southeast Asia 350 400 half the previous year’s 2013 than the previous year: Australia, India and Source: AVCJ Research total and less than South Korea. They are among the few bright * Completed institutional fundraising Note: Does not include government-linked private equity vehicles one eighth of the year spots from a period in which a total of $50.9 before that – while billion has been committed to Asia by global, and 48 received up to $199 million. other markets, if not expanding, are certainly not regional and national funds. The full-year total Of the 20 largest final closes of the year so dropping to the same extent. should surpass the post-global financial crisis far, eight have ties to government or strategic Japan is the big beneficiary, with $5.1 nadir that was 2009, but only just. investors. Remove these from consideration and billion raised so far this year, nearly double the It should be noted, however, that the Australia only two funds occupy the space in between 2012 total. Economic reform is a factor but it figure is deceptive. Of the $10.3 billion deployed, MBK on $2.7 billion and Kedaara Capital on $540 is worth noting that a lot of the capital raised more than half can be traced back to one million. Six of that top 20 also came in under went into government-linked funds tasked infrastructure deal: the acquisition of a 99-year target. with reinvigorating small business. South Korea lease of Port Botany and Port Kembla by Abu

$1.7b – CVC Capital Partners-led $647m – Equis Funds Group closes $2b – LGT closes third global consortium completes $1.7b take-private its maiden fund at $647m secondaries fund at $2b of Malaysia KFC franchise QSR Brands $482m – MBK Partners acquires $700m – India real estate investor

$1.4b – Recapitalization of Australia’s Komeda Coffee from Advantage Partners ruary Ireo commits $700 million to India Grand

Nine Entertainment results in a $1.4b loss for $482m b Hyatt hotel chain January for CVC Capital Partners e

$208m – Unitas Capital acquires F $650m – Archer Capital sells Ausfuel $796m – The Carlyle Group exits its Shenzhen ZTE Netview Technology for to Trafigura subsidiary Puma Energy for remaining stake in China Pacific Insurance $208m $650m for $796m, for an overall profit of $4b $200m – KKR makes $200m $614m – Deutsche Bank reaches a $669m – The Carlyle Group exits follow-on investment in Vietnam’s Masan final close of $614m on its second global capsule supplier Qualicaps to Mitsubishi Consumer Corp secondaries fund Chemical for $639m >>>

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 13 Review of the year [email protected]

Dhabi Investment Authority, IFM Investors and Alliance Tire Group for a price said to be around to rollover debts and a government concerned four local superannuation funds. TPG Capital $470 million and Apax Partners’ $420 million about the impact of these companies’ expansion secured poultry producer Inghams Enterprises acquisition of software developer GlobalLogic. on small businesses. for $901 million, but beyond that it has not been There are several forces at work here. One, it Morgan Stanley Private Equity Asia’s $215 a stellar year for buyouts. is a function of GPs looking for alternative exit million acquisition of tissue paper manufacturers Ssangyong C&B and Monalisa Daejeon, plus related assets, falls into the former category – a Private equity investment by market family owner with no natural heir who was 100,000 willing to quietly explore sale options. Affinity Equity Partners, meanwhile, completed a carve- 80,000 out from a local corporate, paying mobile carrier SK Telecom $236 million for a majority stake in 60,000 Loen Entertainment, which owns MelOn, the Korean equivalent of iTunes. 40,000 However, the largest Korean buyout of the US$ million year was another kind of divestment. ING has 20,000 been selling off assets to satisfy the conditions of a post-global financial crisis bailout and MBK 0 2007 2008 2009 2010 2011 2012 2013YTD Partners picked up the European group’s Korea Australasia Japan South Asia insurance business in a deal worth $1.65 billion. Greater China South Korea Southeast Asia Private equity investment in the country Source: AVCJ Research stands at $7.5 billion year-to-date, exceeding the 2012 full-year total by a mere $100 million. However, the buyout share has increased by two Only five other deals surpassed $200 million, routes in a challenging market, including – as it thirds to $4 billion, the highest level on record. compared to 13 in each of the two previous the case with GlobalLogic – VC investors working South Korea accounts for 18% of total Asia years, although further down the food chain – in partnership with a founder-entrepreneur buyout deal flow in 2013, up from 8.6% in 2012 into the territory of lower mid-market buyout who retains the largest individual stake in the and 1.5% in 2011. Three of the 10 largest private funds – activity is more consistent. business. Two, pan-regional funds are in general equity deals announced this year – not including India, by contrast, is seeing more buyouts increasing in size with each vintage so there are infrastructure or real estate – are Korean. No than ever before. It remains a predominantly more people out there with the ability to write other country is as well represented. growth capital market, with these transactions large checks. Buyout activity across Asia has been accounting for close to half the $7.4 billion Reasons three through five are: generational reasonably strong in 2013. Even though Japan deployed so far in 2013. But uncertainty over change among family owners with younger saw cumulative deal value come in lower than public market exits and the country’s economic members often more open to giving up the previous year – $4.5 billion versus $5.4 billion trajectory has seen minority deals dwindle. control, divestments of non-core assets by – it is still the second-highest annual total since Buyouts, meanwhile, total more than $1.95 conglomerates that often need to pay down 2007. KKR’s $1.7 billion acquisition of Panasonic billion. Control investments have previously debt, and monetization driven by entrepreneurs’ Healthcare is the largest single transaction in the crossed the $1 billion threshold only twice – in inability to scale up beyond a certain level. region outside the infrastructure space. 2006 and 2007, when the market was at its peak. In this respect, there are clear similarities Still, Asia buyouts look set to decline on Notably, five of the 12 India-related control to Korea. In addition to succession planning a year-on-year basis and China is another deals announced in 2013 have seen an existing issues, deal flow is being generated by domestic contributing factor, with the slowdown in private private equity investor sell up, including the conglomerates coming under pressure to sell equity-backed take-privates of US-listed Chinese two largest: KKR’s purchase of a majority stake in off non-core businesses from banks unwilling companies. Nine deals worth $6 billion were

$400m – Kingdom Holding leads a $285m – CLSA Japan sells its 100% $3.5b – RRJ Capital reaches a final h

$400m round of funding for Chinese online stake in Japanese marketing firm Everlife c close of $3.5b on its second Asia-focused retailer JD.com for $285m fund ar

ruary $372m – RRJ Capital and GSO Capital $276m – Archer Capital-owned Aged $1.5b – Development Bank of Japan M

b invest $372m in Cheniere Energy Partners Care Partners buys Lend Lease’s aged care launches $1.5b fund

e unit for $276m

F $360m – The Australian government $1.3b – CVC completes $1.3b partial commits $360m in new funding for the 80% – CVC Capital Partners buys an exit from Indonesia’s Matahari Department Innovation Investment Fund 80% stake in Philippine BPO form SPi Global Store Holdings $303m – TPG Capital sells half its $1.1b – Neuberger Berman Group stake in Indian financier Shriram Transport 2.5x – Advent Private Capital sells reaches final close of $1.1b on its second Finance for $303m Locker Group Holdings to US-based global co-investment fund Valmont Industries for a 2.5x return >>>

14 avcj.com | December 10 2013 | Volume 26 | Number 47-48 Review of the year [email protected]

announced in 2012; six more have followed in 2010, $20.2 billion in 2011 and $8.5 billion in Corporation – does not represent traditional this year worth a collective $4.6 billion as the 2012, which makes this year’s zero look all the private equity capital. valuation differential that drove many of these more alarming. Australia is on course for its second-largest transactions begins to fade. Portfolio company IPOs for Asia as a whole are year on record, with more than $1.6 billion China is also central to the ongoing the weakest in a decade – $11.1 billion and 87 generated by Dick Smith Holdings (Anchorage moderation in growth capital investment. The offerings so far in 2013, down from $34.7 billion Capital Partners), OzForex Group (The Carlyle country has seen PE commitments of $15.7 and 189 offerings the previous year – and while Group, Accel Partners and Macquarie), Virtus billion in 2013, well short of the previous year’s China is the single largest contributing factor it Health (Quadrant Private Equity) and Nine $25.1 billion. Nevertheless, the drop-off in not the only one. Hong Kong has seen PE-backed Entertainment (Apollo Global Management and growth investments – a result of a shuttered IPOs slump to $5.2 billion from $8.2 billion, $11.9 Oaktree Capital). Up to $475 million more will domestic IPO markets invalidating the quick-flip billion and $46.6 billion in the three previous come from Crescent Capital Partners-owned model to which many renminbi-denominated Cover-More Group funds adhered – was more than matched by Largest private equity deals, 2013 before year end. a steep decline in PIPE deals, which fell to $2.7 Hong Kong has also billion from $7.7 billion the previous year. This is Amount seen more traction as I nvestee (US$m) PE investor because sovereign wealth funds had a relatively 2013 has progressed. quiet year trading in and out of China’s Big Four Panasonic Healthcare (Japan) 1,660 KKR Thirteen of the state-owned banks, a reminder that one big ING Life Insurance Korea (Korea) 1,539 MBK Partners territory’s 21 private transaction can really move the needle. Giant Interactive Group (China) 1,510 Baring Private Equity Asia equity-backed IPOs have happened since Green Non-Life Insurance (Korea) 1,368 Jabez Partners September and in only EXITS: GREEN SHOOTS S.F. Express (China) 1,308 China Merchants Group; CITIC a handful of cases did Capital; Oriza Holdings; Jade Capital in certain markets PE firms participate as Bharti Airtel (India) 1,250 Qatar Foundation Endowment cornerstone investors, IPOs began to pick up towards the NEPA (Korea) 958 MBK Partners effectively supporting Inghams Enterprises (Australia) 902 TPG Capital an IPO that might end of the year, with the exception otherwise struggle to Osaka Prefectural Urban 772 Lone Star of China where frustrated GPs are Development (Japan) be fully covered rather looking at alternative exit routes Nextgen Networks (Australia) 647 OTPP than building up a Source: AVCJ Research company towards a Note: Does not include real estate and infrastructure public market exit. Making up for lost time, and keen to Furthermore, the return capital or at least the liquidity of publicly- years. India and Malaysia are also lagging, US capital markets – which have been wary of traded equities to anxious investors, private although for the latter it is more business as usual Chinese private enterprises ever since the spate equity firms end 2013 flocking back to the IPO after a bumper 2012. of accounting scandals in 2011 – are opening up markets. But only in selected jurisdictions. There is, however, reason to be positive, again. There were 33 private equity-backed Asian The Chinese bourses have remained firmly particularly given the uptick in fortunes in the listings on US bourses in 2010; this fell to 12 in closed to new listings for more than a year. Even second half of the year. Economic reforms in 2011 and then just two the year after that. So far though the securities regulator has indicated Japan have spurred the Nikkei and private equity this year there have been six, raising $657 million that the embargo will be lifted in early 2014, firms are taking advantage with 26 offerings between them. the backlog of companies that have applied to generating proceeds of $1.1 billion; the dollar Asset owners and IP arrangers are certainly go public stretches into the hundreds. Private total is only down on 2012 because of Japan being more careful about what they put in equity-backed offerings in Shanghai and Airlines’ $8.5 billion IPO and the supporting fund front of US investors. Of the six offerings, only Shenzhen delivered proceeds of $31.8 billion in that case – Enterprise Turnaround Initiative Qunar has yet to turn profitable but it has

$880m – TPG Capital acquires Australian $101m – New Zealand-based l $10.3b – Silver Lake closes its global poultry firm Inghams Enterprises for $880m Pencarrow Private Equity reaches a final close i buyout fund at $10.3b on its fourth fund at $101m $537m – KKR exits Japanese recruitment pr $950m – Unitas Capital sells firm Intelligence Holdings 11x – Mekong Capital makes 11x return A Australian car parts supplier Exego for off its $3.5m investment in Mobile World $950m, securing a 3.3x return China special situations $303m – through a partial exit to CDH Investments investor Shoreline Capital closes its second $500m – KKR pays $500m for fund at $303m Warburg Pincus’ controlling stake in Indian tire maker Alliance Tire Group $187m – CVC Capital Partners makes a partial exit from Hong Kong-listed Samsonite $450m – StepStone holds a final International, selling $187m worth of shares close of $450m on its second global secondaries fund >>> >>>

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 15 Review of the year [email protected]

in recent years, with domestic and Asian buyers Private equity-backed IPOs far more prolific than they once were. 100,000 350 China’s leading technology players – once VC-backed start-ups themselves – have been 300 80,000 particularly active as they pursue diversification 250 60,000 through M&A. Baidu, Alibaba, Tencent Holdings 200 and Sina have between them committed $2.5 40,000 IPOs billion across 15 deals so far this year. In the US$ million 150 eight years to 2010, acquisitions totaled $628 20,000 100 million. Baidu has been the biggest spender: it 0 50 picked up 91 Wireless from NetDragon Websoft 2007 2008 2009 2010 2011 2012 2013YTD and VC investors including IDG Capital Partners, No. of IPOs Amount raised (US$m) DT Capital Partners, ID TechVentures and Vertex Source: AVCJ Research Venture for $1.85 billion; and PPS’ online video business for $370 million, creating an exit opportunity for investors including Ceyuan Ventures and Qiming Venture Partners. Private equity exits by type Asia exits have, on the whole, disappointed 60,000 500 in 2013, coming in at $37.8 billion compared to $53.3 billion in 2012 and $49.2 billion in 2011. 50,000 IPOs were inevitably down year-on-year, but so 40,000 400 too were open market exits and trade sales. And despite all the talk about secondary transactions, 30,000 Exits they also fell sharply from 2012. Of the $30 billion 20,000 300 in trade sales last year, $12.8 billion comprised US$ million business between private equity investors; so far 10,000 this year, secondaries account for just $5.6 billion 0 200 of $23.9 billion in trade sales. 2007 2008 2009 2010 2011 2012 2013YTD There are pockets of activity (India No. of exits IPO Open market Share buyback Trade sale secondaries have surpassed last year’s record Source: AVCJ Research high of $1.5 billion) and the 2012 figure was deceptively high (for example, it included Temasek Holdings buying a minority stake in a strong strategic backer in majority-owner in the form of trade sales to tech giants such Industrial and Commercial Bank of China from Baidu. Sports lottery provider 500.com (Vision as Baidu, Alibaba, Tencent Holdings and Sina. Goldman Sachs for $2.3 billion), but the transfer Knight Capital and Sequoia Capital), classifieds As IPOs dwindled – 98 offerings by Chinese of control from one private buyer to another site 58.com (SAIF Partners, Warburg Pincus and companies on any bourse generated proceeds remains a relatively rarity in Asia. DCM), online retailer LightInTheBox (Ceyuan of $16.8 billion in 2012, but this has fallen to 25 Of the 20th largest exits in 2013, only two Ventures, GSR Ventures and Trustbridge Partners) offerings and $5.7 billion in proceeds in 2013 – so fit this model: KKR’s purchase of a controlling and semiconductor manufacturer Montage trade sales have ballooned to an all-time high of stake in India’s Alliance Tire Group from Warburg Technology Group (AsiaVest Partners and Intel $7.7 billion. Pincus for around $470 million; and MBK Partners’ Capital) all entered the black in 2012 or early Private equity investors across the spectrum acquisition of Japanese coffee shop chain 2013. report that they have seen a significant Komeda Coffee from Advantage Partners for China VCs have also found a new exit channel transformation in the nature of strategic interest $483 million.

l $260m – Australia’s Anchorage 4x – CITIC Capital Partners and CDH $1.56b – TPG Capital and Northstar i

Capital Partners closes Fund II at the $260m Investments see 4x return on China’s ay Group make a partial exit from Indonesian

hard cap Nanjing Aotecar exit M bank BTPN for $1.56b pr

A $125m – PAG invests $125m in real 3x – CITIC Capital Partners and Vector $1.2b – The Qatar Foundation estate developer China South City Holdings Capital exit RAE Systems through a $340m Endowment pays $1.2b for a 5% stake in trade sale, generating a 3x return India’ s Bharti Airtel $100m – Goldman Sachs and GIC Private commit $100 million to Chinese $1.1b – Macquarie Capital exits private health management company Taiwan Broadband Communications iKang following its $1.1b IPO $600m – Tata Capital holds a $600m final close on Tata Opportunities Fund >>>

16 avcj.com | December 10 2013 | Volume 26 | Number 47-48 Review of the year [email protected] Onward bound: Asia PE people moves

LIMITED PARTNERS Composition Capital Partners: Whye Khazanah Nasional: Charon Wardini Choong Low joins as principal and head of Asia Mokhzani, deputy CEO of CIMB Group, becomes Pacific in Hong Kong. executive director in the managing director’s Adv eq: Ron Li, previously of Legend Holdings, office. joins as head of China. Continuity Capital: Scott Hancock, previously of Bain Capital, becomes partner and Korea Investment Corporation: AlpInvest Partners: Neal Costello steps head of Asia, based in Hong Kong. President and CEO Chong-suk Choi resigns, with down as head of the secondaries team in Hong CIO Dong-ik Lee stepping in as interim president. Kong after less than a year in the role. GIC Private: Lim Chow Kiat is promoted to group chief investment officer from deputy Korea Teachers Pension Fund: Park Min Australian Council of CIO, replacing Ng Kok Song, who takes on the Ho becomes CIO, replacing Yun Kyu Lee. Superannuation Investors: Gordon advisory role of chair of global investments. Hagart, head of environmental, social and Massachusetts Pension Reserves governance risk management at Future Fund, is FLAG Squadron Asia: Partners David Pierce Investment Board: Michael Bailey becomes appointed CEO, taking over from Ann Byrne. and Jacob Chiu resign; Tina Wei, a principal, also senior investment officer and director of private departs, while Joseph Tien, a senior associate, equity, the post held by Wayne Smith until 2011. BlackRock: Jeong Hoon Lee is appointed joins Pathway Capital Management. head of the alternative investment strategy MLC: John Brakey has resigned as head of group for North Asia, based in Seoul. Harvard Management Company: Lane private equity and is replaced by Natalie Meyenn, MacDonald, managing director of the public who moves up from her role as chief investment California Public Employees’ markets platform, is promoted to managing officer for the PE division. Retirement System: CIO Joseph Dear director of private equity. hands day-to-day responsibilities to Theodore National Pension Service: Kwang Choi, Eliopoulos, the senior investment officer for real Highland Capital Management: Jun an economist who served as Korea’s health and estate, while he undergoes treatment for cancer. Park becomes director of business development welfare minister in the late 1990s, is named in South Korea. chairman and CEO, replacing Kwang-woo Jun. CDC Group: Alagappan Murugappan, previously CEO at UTI Capital, joins as managing IFM Investors: Philip Bower, head of the New York State Teachers’ Retirement director with the Asia funds team. private assets division, is selected to lead a System: John Virtanen becomes managing consolidated PE and private assets division. director for PE, moving over from the system’s China Investment Corporation: Ding Xuedong, a deputy secretary general of the State Council, becomes chairman, replacing Lou Jiwei; Xiaopeng Li, formerly of Industrial & Commercial Bank of China, is named supervisory board head.

Commonfund Capital: Leenong Li, head of the Beijing office and wider Asian initiatives, becomes managing director. David G Pierce Alison Nankivell Yibing Wu

$241m – KKR sells its remaining 11.8% 2.9x – KKR, CDH Investments make a 2.9x $7.5b – Apax Partners reaches a stake in Australia’s Seven West Media for partial exit from China Mengniu Dairy for $7.5b final close on its eighth global fund $241m $410m

June $683m – CITIC Capital reaches a $110m – Goldman Sachs invests$110m 7x – Phillip Private Equity exits vaccine final close of $683m on its China Retail in Indian cable distribution company DEN developer Inviragen for $250m, generating a Properties Investment Fund networks 7x return $400m – Southern Capital Group $10.3x – China New Enterprise raises approximately $400m for its third Investment exits China’s Jilin Liyuan buyout fund Aluminum for a 10.3x return $387m – Carlyle exits its 24% stake in Chinese infant formula manufacturer Yashili for $387m >>>

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 17 For your bright future, we've got all the angles covered

Newgate Communications advises private equity rms and portfolio companies on their corporate and nancial communications needs.

We help private equity rms to: BUILD an unique corporate brand ENHANCE relationships with LPs GROW deal-pipelines COMMUNICATE deals and fundraisings DRIVE portfolio companies’ brand recognition ARTICULATE their story better through presentation and media coaching HANDLE crisis situations 24/7

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property portfolio, now overseen by David Gillan.

New Zealand Superannuation Fund: For your bright future, Chris Jagger is appointed manager with responsibility for unlisted mandates, having most recently served as an investment director with we've got all the angles Lloyds Development Capital in London. Hiro Hirano Hans Tung Tim Dattels Gautam Banerjee Ontario Teachers’ Pension Plan: Alison covered Nankivell leaves her role as head of Asian fund 3i Debt Management: Lisa Johnson join as heads of the Sydney and Adelaide offices. investments for a job with Business Development becomes director of investor relations in Asia, Bank of Canada. based in Singapore. Boyu Capital: Mary Ma, co-founder and chairman, is appointed as a non-executive Newgate Communications advises private equity OPSEU Pension Trust: Stan Kolenc and Actis: Ivy Santoso becomes country head director of Hong Kong Securities and Futures Morgan McCormick, managing director and for Indonesia, a role she previously fulfilled for Commission. rms and portfolio companies on their corporate portfolio manager, respectively, relocate to Avenue Capital. Australia to set up a Sydney office. Brookfield Asset Management: Niel and nancial communications needs. Advent International: Managing Director Thassim, previously managing director and Oregon Public Employees Retirement Filippo de Vecchi and Principal Andrew Li head of RREEF’s Asia-Pacific real estate business, Fund: Jay Fewel, senior investment officer relocate to the newly opened Shanghai office; becomes head of Asia. responsible for building the fund’s private equity Michael Ming-Yue Zhu, William Tsao and Lincoln We help private equity rms to: program, retires from his position. Chee join the China operating partner program. The Carlyle Group: Rajiv Louis, previously managing director and country head for UBS in BUILD an unique corporate brand San Francisco Employees’ Retirement American Capital Energy & Indonesia, joins as managing director. ENHANCE relationships with LPs System: Art Wang moves from New York State Infrastructure: Abhay Pande is appointed GROW deal-pipelines Common Retirement Fund to become managing as managing director for Asia, having previously CLSA Capital Partners: Dr. Richard director for private markets, with responsibility for served as co-head of energy global banking in Woodling, previously director of global research COMMUNICATE deals and fundraisings private equity, real estate and real assets. the region for Citigroup. and development at Siemens’ water R&D center DRIVE portfolio companies’ brand recognition in Singapore, becomes an operating partner with Temasek Holdings: Yibing Wu, previously Armstrong Asset Management: Yasushi the Clean Resources Asia Growth Fund. ARTICULATE their story better through presentation and media coaching chairman and CEO of Goldstone Investment Ujioka joins as investment director. HANDLE crisis situations 24/7 and president of CITIC Private Equity Funds CVC Capital Partners: Charles Huh joins Management, becomes senior managing Baird Capital: Yongshan Zhang is promoted from Standard Chartered Private Equity as senior director and head of China; Boon Heng becomes from vice president to principal, based in managing director responsible for South Korea. chairman, succeeding Suppiah Dhanabalan. Shangahi. For more information please contact: General Atlantic: Sandeep Naik is The Blackstone Group: Gautam appointed managing director and head of Hong Kong: GENERAL PARTNERS Banerjee, previously executive chairman of the India office; Alok C. Misra becomes senior Richard Barton Grace Zhang PricewaterhouseCoopers Singapore, becomes vice president of the firm’s resources group in 3i: Anil Ahuja, managing partner and head Singapore chairman; Antony Leung steps down Mumbai; Shantanu Rastogi joins as a principal Managing Partner Partner of Asia , quits the firm to pursue other as Greater China chairman to become CEO of and Vijay Venkat and Varun Talukdar are hired as T: +852 3758 2686 T: +852 3758 2687 opportunities; Samir Palod, a partner in the Hong Kong conglomerate Nan Fung Group. associates, also in Mumbai. E: [email protected] E: [email protected] infrastructure business, becomes managing director for India. Blue Sky: Andrew Champion and Mark Watson GGV Capital: Hans Tung, previously Beijing Singapore:

Terence Foo Lim Yuan See $370m – CITIC Private Equity completes $6b – KKR’s Asian Fund II closes at $6b, $239m – Affinity Equity Partners buys Managing Partner Partner $370m take-private of Chinese biotechnology becoming the largest regional private equity 52.6% of South Korea’s Loen Entertainment firm 3SBio pool ever raised for $239m T: +65 6532 0606 T: +65 6532 0606 July E: [email protected] E: [email protected] $275m – Partners Group acquires Indian $3.6b – HarbourVest Partners closes the $213m – First Reserve-backed IT outsourcing firm CSS Corp for $275m Dover Street VIII secondaries fund at $3.6b, KrisEnergy raises $213m via its Singapore IPO beyond the $3b target $200m – Warburg Pincus pays $200m $184m – Advent Private Capital for a 20% stake in retail property platform $409m – AMP Capital buys 42% of reaches final close of $184m on Fund VI Vingroup Powerco NZ Holdings from Brookfield Infra Anacacia Capital sells Rafferty’s Partners for $409m 10x – Garden to PZ Cussons for 10x return in a $252m – The Abraaj Group exits its $64m deal 50% stake in Acibadem Sigorta to Khazanah Nasional as part of $252m deal www.newgatecomms.com >>>

Brussels Frankfurt Hong Kong London Singapore Number 47-48 | Volume 26 | December 10 2013 | avcj.com 19 Review of the year [email protected]

managing partner at Qiming Venture Partners, New Enterprise Associates: Carmen Telstra: Deena Shiff, managing director joins as a partner. Chang is promoted from senior special advisor to the VC unit, resigns; Matthew Koertge and Asia partner and managing director. Mark Sherman, managing directors of Telstra Global Environment Fund: Sridhar Application Ventures Group in Australia and the Narayan is to promoted to managing director in PAG: Suining Xiao, former chairman of Shenzhen US, respectively, assume group leadership. the India team. Development Bank, joins as China chairman. TPG Capital: Tim Dattels returns to Asia to Gresham Private Equity: Mark Yoens Providence Equity Partners: Patrick jointly lead regional PE operations with Ben Gray, vacates his role at joint head, leaving Mark Corso, head of the Hong Kong office, leaves the while Stephen Peel withdraws from day-to-day Rimmer in sole charge. firm and his Greater China duties are picked up management. by Tao Sun while Biswajit Subramanian assumes IDG Ventures Vietnam: Managing Partner responsibility for the rest of the region. TVS Capital: Karthik Ranganathan, formerly Henry Nguyen is appointed developmental of Baring Private Equity Partners India, joins as an licensee for McDonald’s in Vietnam. Qiming Venture Partners: Nisa Leung, investment director; Rahul Deshpande becomes head of the healthcare practice, is promoted to a director; Chakravarthi Lokapriya joins to lead its Intermediate Capital Group: Nyree managing partner. PIPE and pre-IPO investments. Hu joins from CQS as Asia director in the global distribution team. Quadria Capital: Rajesh Singhal becomes principal managing partner, with responsibility INDUSTRY J-Star: Satoru Arakawa is promoted from for education and healthcare portfolio ASSOCIATIONS principal to partner. companies in India Build-Out Fund I. A ustralian Private Equity & Venture KKR: Hiro Hirano, previously of AlixPartners, Standard Chartered Private Equity: Capital Association: Yasser El-Ansary, a becomes managing director and CEO for Japan, Alastair Morrison gives up his position as global senior executive at the Institute of Chartered with existing CEO Shusaku Minoda promoted co-head to become vice chairman of principal Accountants Australia, becomes CEO, replacing to chairman; Hiro Shimizu and Sakae Suzuki also finance, and will retire from the firm at the end of Katherine Woodthorpe. join the Tokyo office as directors in the capital year; Wei Zhu, previously head of China, is named markets and Capstone divisions, respectively. global co-head alongside incumbent Nainesh China Venture Capital & Private Jaisingh; Ravinder Singh Grewal, Mukul Nag Equity Association: John Zhao, CEO of The Longreach Group: Takuya Sato and and Rahul Raisurana, all India-based managing Hony Capital, becomes chairman, replacing Kishin Ryu, both of whom previously worked for directors, leave the firm. Yichen Zhang, his counterpart at CITIC Capital. Barclays Capital, become executive director and associate, respectively. Starfish Ventures: Malcolm Thornton and Emerging Markets Private Equity Nick Peace convert from investment directors Association: Robert W. van Zwieten, Lunar Capital: Eric Yiming and Vincent Sun to venture partners, ahead of their expected previously director of private sector capital joint as sector partners. departure from the firm. markets at the Asian Development Bank (ADB), becomes president and CEO, replacing Sarah Mekong Capital: Chad Ovel, who previously TA Associates: Dhiraj Poddar is promoted Alexander who moves to The Abraaj Group. worked for a Mekong portfolio company, is hired from director to principal in the Mumbai office. as a partner. Hong Kong Venture Capital & Private Tata Capital: Tata Opportunities Fund CIO Equity Association: Conrad Tsang, Motilal Oswal Private Equity: Sharad Padmanabh Sinha becomes managing partner, managing director at Baring Private Equity Asia, Mittal, previously of ICICI Prudential AMC, is replacing Mukund Rajan; Bobby Pauly is elevated becomes chairman, replacing David Pierce, appointed as head of real estate. to partner from principal. partner at FLAG Squadron Asia.

$1.85b – IDG, DT Capital, iD Tech and $370m – Sequoia Capital’s China $263m – SE Asia focused KV Asia Capital Vertex Venture exit 91 Wireless to Baidu in Venture Fund IV closes at $370m closes its debut fund at $263m, exceeding the $1.85b deal $250m target $322.6m – Blackstone offers to buy

ugust $1.65b – MBK Partners agrees to buy a Hong Kong-listed real estate developer Tysan $160m – Tiantu Capital closes its sixth

A majority stake in ING Group’s South Korean Holding for $322.6m renminbi-denominated fund at $160m life insurance division for $1.65b $296m – Temasek sells a 3.62% stake in $123.6m – AMP Capital sells a 47.62% $843m – Baring PE Asia agrees to exit India’s Bharti Telecom to SingTel for $296m stake in Domain Principal Group to G.K. Goh Magic Holdings International to L’Oreal for Holdings for $123.6m Catalyst Investment Managers $176m as part of a $843m takeover $274m – exits Australian retailer EziBuy to Woolworths 3.5x – Unitas Capital exits its stake in $490m – US-listed Simcere in a $274m deal Edwards Group to Atlas Copco for 3.5x return Pharmaceutical Group accepts Hony Capital as part of a $1.6b deal backed $490m MBO offer. >>>

20 avcj.com | December 10 2013 | Volume 26 | Number 47-48 Review of the year [email protected] / [email protected] / [email protected] Predictions for 2014 From fundraising and secondaries to deal flow and exit strategies, private equity professionals from across the region give their perspective on the year to come

David Grayce, managing director at The outlook for operating conditions for the Richard Folsom, co-founder of Pacific Equity Partners, on Australia 90% of the economy that is non-mining will Advantage Partners, on Japan We expect a number of important currents to continue to improve. Post-crisis, the economy For Advantage Partners, 2013 has been a record continue into 2014 as the environment for mid- has been more resilient in Australia than in year in terms of exits. We have also done four market buyouts in Australia and New Zealand other markets though the intensity of mining new deals, and our pipeline looking forward shifts back from what have been constraining activity did crowd out some other sectors. As is fairly solid. We anticipate a continuation of conditions, towards more favorably normal ones. the mining boom continues to move through the momentum seen over the past year both On the new acquisition side, momentum has the capital expenditure stage in terms of exits and new deals. picked up materially. Australia and New Zealand into the production stage, the While I think public market is the fifth biggest M&A market in the world, outlook for businesses outside performance over the past year however after an active 2012, activity in the first that sector has improved. While is going to be a benchmark for half of 2013 was well below average. That lull there will be a delay before the seller pricing expectations, I don’t may have related to vendor uncertainty created full benefits of lower interest think it is an indication that deals by the unusually long eight-month Federal rates and a more competitive are going to be overpriced. If we election campaign which ended in September. currency flow, that expectation is look at the most recent deals we Since then, we have seen above average activity already being reflected in higher closed in October, both were at levels. Companies with solid business models levels of business confidence and reasonable 4-6x multiples. and good market positions but misaligned improved consumer sentiment. On the other hand, public incentive structures that struggled in the multi- Similar forces support equity David Grayce market conditions will likely have speed economy are coming to market. capital markets, which will likely a positive impact on new deal Leverage markets have changed and are continue to afford liquidity into flow in that entrepreneurs who increasingly supportive. Through 2013 we saw a 2014. Australia has the third largest have been thinking about exiting number of globally active, fund-based leverage equity market in Asia capitalized businesses are more likely to do providers enter Australia and New Zealand for the at $1.4 trillion, and flows from so now. They see that pricing, first time. Predominantly but not solely focused the mandatory superannuation market conditions and the on the middle tranches of the capital structure, retirement savings scheme drive performance of their company these funds are expected to bring product growing demand for equities. have come to a level at which breadth and pricing tension to an already healthy Market valuations are above long- they are more willing to do a deal. debt market, as always underpinned by the term averages and investors are When we do see higher reliable AA-rated Australian banks. Also during receptive to IPOs from sponsors. acquisition prices in the market it 2013, sponsors with high-quality assets were The level of structural Richard Folsom is usually in the context of heavily able to access the US Term Loan B market for the competition for assets in mid- auctioned deals, but those are first time, bringing additional financing flexibility market buyouts will continue to be subdued. A still in the minority. Most of the small and mid- and quantum into local markets. However, this long established segmentation exists in the local market deals are more closely shopped, if they development is less likely to be a persistent market and a number of previously active players are shopped at all. Local financial advisors will feature. have exited in recent years. talk to two or three potential buyers, work with

$4.7b – CDH, Goldman Sachs, New $715m – TPG Capital agrees to $152m – Khazanah Nasional invests

er Horizon, Temasek Holdings-backed sell China’s UT Capital Group to Haitong $152m for 4.95% stake in Beijing Enterprises

b Shuanghui International acquires Smithfield International for around $715m Water Group Foods for $4.7b $552m – KKR buys 10% of Chinese $1.67b – KKR agrees to buy an 80% home appliance maker Qingdao Haier for stake in Panasonic Healthcare for $1.67b $552m eptem

S $1.4b – Temasek Holdings’ Mapletree $350m – Lombard Investments closes Investments closes its China Opportunity its SE Asia-focused fourth fund at $350m Fund II at the $1.4b hard cap $206m – VC-backed mobile game $900m – Hamilton Lane closes its developer Forgame Holdings raises $206m Secondary Fund III at $900m, surpassing the through a Hong Kong IPO $650m target >>>

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 21 11th Annual Private Equity & Venture Forum Australia & New Zealand 2014 5-7 March, Four Seasons Hotel, Sydney

GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY avcjausnz.com Book Australasian private equity: Leading early SAVE the way in a changing market US$760 until December 20 Early confirmed LP speakers to attend the event include: only th Clive Boyce Michael Kelly Investment Manager Deputy Chief Investment Officer FUNDS SA THE MYER FAMILY OFFICE

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Michael Weaver Portfolio Manager SUNSUPER PTY LTD … and many others!

For the latest programme and speaker line-up, please visit avcjausnz.com Contact us Registration: Pauline Chen T: +852 3411 4936 E: [email protected] Sponsorship: Darryl Mag T: +852 3411 4919 E: [email protected]

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Aus14_adV_1012.indd 1 10/12/2013 7:25 PM 11th Annual Private Equity & Venture Forum Review of the year Australia & [email protected] / [email protected] / [email protected] New Zealand 2014 5-7 March, Four Seasons Hotel, Sydney the seller to identify the best fit – and not only in more confidence among LPs. still a question mark, as there are terms of price – and then move things forward Issues over regulation, concerns over what has been under that process. In such cases people are not economic and political happening in terms of liquidity necessarily paying 8-10x EBITDA, more like 5-7x. uncertainty and depressed public and exits in China. I see a lot of We will continue to see a lot of succession markets have made it difficult to LPs starting to reassess whether deals with founder-owners as well as a few invest in China in recent years it would make sense to commit public-to-private deals, and some secondary but 2014 could well prove to be to straightforward China growth activity. Another pillar of the market has been a crucial turning point. Structural equity funds or whether they large corporate divestments. I am sensing right reforms, better transparency and need to find a different strategy or now, with the public markets up and large more confidence in the business look to different geographies. corporate earnings up, the sense of urgency community should all provide Fred Hu The fascinating thing is that, to move forward with these divestments is a positive backdrop for private despite PE being a long-term dropping off. So I think, if anything, in the current equity investors. asset class, the change in LP GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY avcjausnz.com environment we will see more ebbing again We will continue to look across appetites towards different instead flowing in terms of activity from the large many sectors and industries and geographies and strategies occurs Book corporates. the number of opportunities is rapidly. The China growth strategy Australasian private equity: Leading early going to expand significantly. Not has for many years been by far SAVE Fred Hu, founder of Primavera just next year, but over the next the largest capital raiser in Asia. the way in a changing market US$760 Capital Group, on China 5-10 years, China will be one of However, given the lack of IPOs until December 20 The outlook for China in 2014 has improved the most crucial and most active and exits in the last couple of significantly compared to previous years. From private equity markets. My only years, there has been a bit of a Early confirmed LP speakers to attend the event include: only th a macroeconomic perspective, the investment big concern would be slippage in rethink. Clive Boyce Michael Kelly climate has improved on the back of the recent executing the reforms. That would Javad Movsoumov Despite the slowdown in Investment Manager Deputy Chief Investment Officer Communist Party Central Committee meeting, be a huge disappointment – not interest, China will continue to FUNDS SA THE MYER FAMILY OFFICE which has brought about the most ambitious just for private equity but for all investors. be an interesting market simply by virtue of its reform program seen for several decades. This size. LPs are just being a bit more discerning in Andrew Major Stephen Miburn-Pyle is set to generate some attractive investment Javad Movsoumov, executive terms of what kind of strategy they are backing General Manager, Investments General Manager opportunities in the Chinese economy. director at UBS Private Funds Group, in China. Without a doubt there are a lot of HESTA AUSTRALIA POST SUPERANNUATION The capital markets reform and the on fundraising opportunities to make good returns and the SCHEME resumption of IPOs will be very important in The most important factor is how much capital economy is still growing at a good pace. the coming year. In addition, the significant LPs will have to allocate private equity in the next Southeast Asia has been attracting significant Gerard Noonan Douglas W. Phillips reduction in government approvals needed year. If you look over the past years, a big chunk amount of investor interest recently, translating Chair Senior Vice President, Institutional to make business decisions will be a big plus, of the capital that went into Asia came from into larger funds raised by established firms and a MEDIA SUPER Resources streamlining investments and reducing deal North America – either directly or via a fund of number of younger private equity teams getting UNIVERSITY OF ROCHETSER uncertainty. funds. The good news in that there has a been a established. Japan has got quite a bit of interest David Simons Suzanne Tavill Given the large backlog of companies waiting lot of capital coming back to North American LPs this year, although I do not know to what extent Director of Private Equity Head of Alternatives, Multi Asset Group for IPO it will not be an overnight change. But from their North American PE funds, so my hope interest at a conceptual level has translated into FUTURE FUND AMP CAPITAL INVESTORS over the next year we will experience a rare and is the amount of capital available for investment funds getting closed. robust IPO environment. A lot of companies will in PE on a global basis will increase. India continues to be a market that has come to the market, creating excitement among The stock market in the US has also proven to be difficult to make returns in and Michael Weaver public investors and providing private equity performed very well this year and the mangers continue to have a difficult time in Portfolio Manager investors with essential exit routes. As the capital “denominator effect” will now work in favor of raising capital. Australia and Korea as developed SUNSUPER PTY LTD … and many others! markets develop at a faster pace, and in line with allocating more capital to private equity. markets are in the middle of the pack in term of global standards and practices, it will bring about How much of that will filter down to Asia is attractiveness. For the latest programme and speaker line-up, please visit avcjausnz.com Contact us $2.7b – MBK Partners closes its third $587m – Morgan Stanley PE Asia part $315m – Goldman Sachs sells down er buyout fund at the $2.7b hard cap exits Hyundai Rotem in $587m in Korea Stock its 8.05% stake in Hong Kong- listed Geely

Registration: Pauline Chen T: +852 3411 4936 E: [email protected] b Exchange IPO Automobile for $315m $1b – Gaw Capital Partners reaches a final

Sponsorship: Darryl Mag T: +852 3411 4919 E: [email protected] to close on its fourth China real estate fund at $500m – Anchor Equity Partners $214m – TPG Capital agrees to buy the $1.025b hard cap reaches a final close on its debut South Korea a 12.15% stake in China’s Phoenix Satellite

Oc fund at the $500m hard cap Television for $214m Co-Sponsors $750m – AlpInvest Partners closes its Secondaries Fund V at the $750m hard cap, $420m – Hony Capital and retailer 200m – KKR makes its first Malaysian exceeding the $500m target Suning Commerce agree to buy a majority investment, paying $200m for a minority stake in PPTV for $420 million stake in Weststar Aviation Services $625m – Chinese NASDAQ-listed firm Pactera accepts The Blackstone Group and $416m – The Carlyle Group, Macquarie $123m – Affinity Equity Partners invests GGV Capital’s $625m take-private bid and Accel Partners-backed OzForex Group $123 million in a Chinese dairy farming joint raises $416m in Australia listing venture with Sunlon >>> avcjausnz.com Number 47-48 | Volume 26 | December 10 2013 | avcj.com 23

Aus14_adV_1012.indd 1 10/12/2013 7:25 PM Review of the year [email protected] / [email protected] / [email protected]

Pak-Seng Lai, managing director and There is also a polarization of the fundraising more activity in the pan-regional funds. People head of Asia at Auda International, market. I see managers that have good teams are paying very high prices for first- or second- on funds-of-funds and track records getting oversubscribed before time funds and not discounting the franchise risk I think there will be more consolidation among they have even launched. On the other hand as much as they should. funds-of-funds – particularly Asian funds-of- there are managers who will take two years to I think pan-regional funds all did reasonably funds. There have already been a number of get a first closing – so there is a flight to quality. well over the past 12 months and as people have acquisitions in recent years. Too many Asian seen quarter-on-quarter improvement in NAV funds-of-funds have evolved over the last 4-5 Tim Flower, principal at HarbourVest they have thought “Why am I selling?” There have years and I think going forward only two kinds Partners, on secondaries been more portfolio management sales rather will sustain. The first will be the global players I would expect GP restructurings to gather pace. than any liquidity-driven sales so I think LPs have offering global solutions – like us – that help Some GPs have struggled to generate sufficient therefore started to look at selling off their B and provide solutions for those entering the asset liquidity to raise interest in their next fund, so C managers. class for the first time. Basically, it is the one-stop they are trying to do something that might shop model that will prevail and players with provide liquidity and help with fundraising. David Brown, transaction services global scale will continue to grow The question over Asian leader at PwC China and Hong Kong, as more people enter the asset private equity is whether the on deal activity class. additional risk has offered In China, there are two factors to drive On the other extreme, there sufficient rewards. I think you transactional activities higher in 2014. Firstly, are funds-of-funds with niche will have smaller teams that are demand for capital from China’s private sector strategies that will fill a certain probably going to fail to raise their companies meets supply of capital in the private gap in a global portfolio. Investors next fund. It will take them a bit equity community, and the desire to spend that from the US, for example, of time to realize that they are capital. The second driver is the backlog of exits, may have good knowledge of running short of options. Many which I think is the single most pressing issue for Europe and Latin American but GPs are wary of doing secondaries the private equity industry in China. The latter will they don’t know much about but I think they will get to grips drive more IPO activities, albeit coming off a very the small players in Asia. Even Tim Flower with that. Eventually I expect as low base, and it will drive more M&A exits. if they do, they often cannot much activity in Asia as in any There will be a move to secondaries although invest because of minimum other part of the world. this is still very small at the moment. There will ticket size constraints. Creating I don’t think it is unreasonable also be a move from growth capital to buyout a niche sector of smaller funds to say India has been the most deals, at least partly because of the perception in emerging markets could dysfunctional private equity that exiting minority stakes will continue to be potentially be attractive to global market. We have looked at a lot difficult in China. investors. Funds-of-funds are of things in that country and However, a limiting factor will be GPs’ ability more driven by investors’ needs there are still pretty unrealistic to find control deals. I think that the good quality, than by investment opportunities expectations on things like growth professional GPs will deploy more money, but available – so a tailor-made rates and valuations. perversely the overall deal numbers are going solution will be important. I think the market has been down because of the trend from higher-volume In terms of fund selections, five David Brown larger this year, straightforward lower-value growth capital deals to lower-volume or six years ago it was very story- LP deals in particular have been higher-value control deals, and also because based. Everyone was too young to be proven so trading at incredible prices as a result of relatively we continue to see consolidation with many of it was investment by faith – you listened to their low supply. What has been interesting is that the more peripheral players dropping out of the story and made an investment decision. Now GPs we have seen proportionately more trading in market. Nevertheless, the number of PE M&A can no longer say it is too early to tell, they need country-specific funds and perhaps less well- engagements we’re advising on currently is more to deliver numbers. known names, whereas before there had been than double the same period last year.

$3b – GIC Private’s warehouse developer $540m – India-focused GP Kedaara $200m – KKR to buy 35-40% of India’s

er Global Logistic Properties launches a $3b Capital raises $540m for debut fund, Gland Pharma for about $200m, 3Logi Capital

b China-focused fund exceeding the $500m target exits. Baring PE Asia supports a $2.8b Chinatrust Commercial Bank Hony Capital-backed property

em $2.8b – $530m – $200m –

v managment buyout of US-listed Giant buys Tokyo Star Bank from Lone Star and developer Hydoo International raises $200m

o Interactive Group creditors for $530m in a Hong Kong IPO

N $1.5b – PAG’s real estate arm Secured $357m – Headland Capital Partners $187m – Warburg Pincus, SAIF Partners Capital makes $1.5b final close on its fifth makes takeover offer for Kreuz Holdings and DCM-backed 58.com raises $187m fund, exceeding the $1b target worth $357m through a US listing. $540m – Warburg Pincus sells its 33.9% $200m – CPPIB commits $200m for $167m – VC-backed Chinese travel stake in Australia’s Transpacific Industries 80% of an office real estate joint venture with website Qunar raises $167m through a Group for $540m India’s Shapoorji Pallonji Group NASDAQ IPO >>>

24 avcj.com | December 10 2013 | Volume 26 | Number 47-48 Review of the year [email protected] / [email protected] / [email protected]

Another nascent trend is an be turning the corner. Those Paul Kang, senior partner at increasing interest in outbound are all positives for the Indian Headland Capital Partners, on investment. Several Hong Kong investment climate. Certainly in Southeast Asia and China-based GPs are looking our sectors of operation there has Southeast Asia as an investment destination to invest in foreign companies been a correction in valuation. continues to be very interesting. We’ve where those companies have It will be interesting to see if the announced three transactions and closed two China angles. They will usually be correction persists when there is a this year. The pipeline continues to be extremely in partnership with foreign GPs sharp upswing in sentiment and healthy. and are looking for deals. China flow of capital. From a regional perspective, everyone says GPs will bring some capital but The Bombay Stock Exchange’s they have spent a lot of time in Indonesia and also know-how and relationships Shashank Singh Sensitive Index (Sensex) hit they probably haven’t been able to get very far. to help foreign companies grow new highs this year and the key In the near term, at least over the first 6-9 months their business in China. Partnering phenomenon is how that flow of next year, that’s likely to continue. I think the with foreign PE firms is important of capital concentrates, because market has become overheated. There is a lot of in order to make sure they pay the over the last 12-18 months a liquidity chasing relatively fewer opportunities in right price for the overseas assets. lot of capital came into the Indonesia. That imbalance will be likely corrected Over the medium term, there largest companies, to the Sensex out. is potentially a huge amount of constituents, and a lot less into the In the meantime, I expect that deal flow institutional capital becoming mid-market. This is where we saw to come out of Malaysia, Singapore, as well as available to domestic managers. opportunities and the ability to some from the Philippines. We closed our first Some of this capital will look for get better valuations because the deal in Vietnam recently and we think that is a diversification opportunities in mid-market was starved of capital, very interesting market going forward. Myanmar overseas markets. While global PE Paul Kang whether equity or debt capital. So is probably still too early for us – also, bear in firms like Bain Capital, The Carlyle providers of capital like us, who mind we are looking to deploy $50-100 million Group or TPG Capital raise capital overseas and did have money to spend, were getting better in capital per transaction. We’re looking to do invest in China, large local PE firms such as Hony opportunities. smaller transactions here only if corporate Captial, CITIC Private Equity and Sailing Capital While the Sensex is at 21,000 points, governance doesn’t become so much of an issue. will raise capital domestically and invest some of representing the largest companies, the BSE The vast majority of deals we’ve done recently it overseas. index for mid-caps is in the 6,000 range, 40% in Southeast Asia have been buyouts, and overall China will have its own local mega private down from its peak. If that difference persists in they have been significantly increasing in size. I equity firms. It will take a few years, but that’s the terms of the nature of capital flow, then we will expect to see this trend continue in 2014. It can direction. continue to see good valuations. If the capital be probably categorized like this: Out of more ends up across the board then perhaps the developed markets, including Malaysia and Shashank Singh, partner at Apax lower valuations may not persist and people Singapore, we will see more buyout transactions, Partners, on India will benchmark more off of the rise in the index. as you have families dealing succession issues We expect a good investment climate relative Having said that, if LP appetite for India continues or shareholders transitions; other markets will to this year. It looks like the economy is turning to be restricted this would perhaps signify that continue to be more growth capital-oriented. a corner, with the macro improving. Let’s see the separation will continue. Generally, the opportunity is more for pan- what happens in the general elections – if there In terms of deal flow, our pipeline is much Asian funds the single-country funds, because is a clear mandate in one direction that will be more weighted towards buyouts at the moment, of their ability to shift geographically in response helpful in terms of giving direction to policy. which I think will be a continuing trend. We’re to interesting dynamics emerging over time. From a global macro perspective, things are seeing a lot more secondaries from other funds The Philippines, for example, may have some improving as well. The US employment report looking to exit portfolio companies and that will interesting opportunities because of its growing last week was positive, and Europe seems to continue to be an opportunity. middle-class and rising consumer expenditure.

$6b – EIG Global Energy Partners reaches $250m – Rocket Internet’s Lazada raises 2x – Lazard Australia Private Equity part

er a final close of $6b on Energy Fund XVI, $250 million, taking its total funding to $486m exits sports apparel brand 2XU to L Capital for

b exceeding the $4.25b target. in 18 months a 2x return Actis closes its third global Southern Capital Group

em $1.15b – $111.4m –

c energy fund at $1.15m, exceeding the $750m backs a management buyout of Malaysia’s

e target by 50% HELP International Corp worth $111.4m D $475m – Crescent Capital Partners’ 760 – The number of firms awaiting Cover-More Group targets A$521.2m IPO on approval for IPOs in China the Australian Securities Exchange 50 – The number of firms expected to list $400m – Baring Private Equity Asia when China’s IPO market re-opens in January completes acquisition of around 71% of 2014 India’s Hexaware Technologies for $400m > ❘❘

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 25 Review of the year [email protected] Snapshots from the 2013 AVCJ Forum The global investment elite congregated in Hong Kong in early November for Asia’s leading private equity and venture capital event. Here are a few of the more memorable moments

Jeremy Coller, K.Y. Tang, Sebastiaan Van Den Berg & X.D. Yang The Blackstone Group’s Byron Wien

KKR’s Joe Bae, AVCJ’s Tim Burroughs & Silver Lake’s Ken Hao AVCJ Awards cocktail

J. Christopher Flowers addresses the Investment Summit

CVC Capital Partners’ Steve Koltes The PE Leaders’ Summit

26 avcj.com | December 10 2013 | Volume 26 | Number 47-48 Review of the year [email protected]

Kathy Jeramaz-Larson and Nicole Musicco address the Limited Partners’ Summit Bain Capital’s Dwight Poler

The Affinity Equity Partners gala dinner

Yoshito Hori, David Brown, Nick Bloy, H. Chin Chou & Marshall W. Parke Janine Feng, Stephanie Hui, Mia Saini, Wendy Zhu & Michelle Leung

Weijian Shan of PAG The 2013 AVCJ Awards winners

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 27 deal of the week [email protected] / [email protected] CITIC rides China’s LNG wave

T wo weeks ago China National tremendous growth across the LNG value chain.” Energy, the company’s gas distribution subsidiary, Offshore Oil Corp. received the first cargo of This featured prominently in the thesis for is targeting 140,000 LNG vehicle customers by liquefied natural gas (LNG) at the Tianjin floating CITIC and Windjammer Capital’s acquisition 2015, or 30-40% of the overall projected market. storage regasification unit. The company now has of Engineered Controls International (ECI), a Government incentives play a role in this the capacity to handle 24.4 million metric tons of US-based manufacturer of valves used in the transition but the fall in global gas prices is LNG per year at six offshore receiving terminals. transportation and storage of equally significant. According Five more will be in operation by 2015, taking LPG and LNG. The price was not to natural gas distributor ENN, it capacity to 35-40 million metric tons per year. disclosed but when the asset costs approximately RMB80,000 This is one part of the infrastructure required was put up for sale in October, ($13,000) to convert a large to accommodate rising demand for LNG, which it was reportedly expected to diesel commercial truck to alongside compressed natural gas (CNG) and fetch around $400 million. LNG. Based on per liter prices of liquefied petroleum gas (LPG) is expected to CITIC is investing through its RMB7.5 for diesel and RMB4.6 account for 8% of the country’s energy mix third international fund, where for LNG, the investment starts by 2015, up from 5% today. The other part is the typical strategy is to acquire LNG in China: Rapid adoption paying off in10 months. downstream distribution: according to Citi, in Western companies that are “Expanding infrastructure, 2009 China had 18 LNG refueling stations; as of underachieving or underpenetrated in China. ECI government incentives, and environmental year-end 2012, there were 368 in operation. is already performing strongly in the country – it considerations all drive LNG adoption, but “One of the key applications for LNG is has a more than 50% share in the LNG space – ultimately people will continue to use LNG long-haul trucking,” says Boon Chew, managing but more capital and support will be required as because it is economical,” says Chew. director at CITIC Capital Partners. “In the US, few the local LNG infrastructure is built out. Before ECI entered China 3-4 years ago, North LNG trucks on the road and lack of LNG stations China National Petroleum Corporation American LPG customers accounted for 100% create a chicken-and-egg scenario. China has said there were 1.48 million natural gas-fueled of revenue. The LNG share – most of which is been able to circumvent that issue by pushing vehicles on the roads in 2012, up 48% year-on- driven by China – has since risen to one fifth of both agendas concurrently, which has generated year, including 70,000 LNG vehicles. Kunlun revenue. L Capital sees 2XU as a good fit a recognized investor in fine foods, from Lazard Private Equity – which acquired in Australia as well as in the US, it is still the tip of jewelry and ladies fashion, L Capital’s decision a significant minority stake in 2011 via Lazard the iceberg,” says Teo. “And the company is also to back 2XU – an Australian manufacturer of Corporate Opportunity Fund 2 – and a number yet to expand into China.” compression sportswear – may seem a slight of strategic investors were keen to acquire the This is something L Capital has already sought departure. In fact it could not have been a more asset. But L Capital won out, paying around A$75 to remedy by approaching Chinese distributors. It perfect fit. million ($68.3 million) for a is also looking to support the expansion of 2XU’s Just as L Capital is at home 40% stake. network of own-branded outlets, of which there with the finer things – its The transaction, a pro-rata are just 17, all in Australia. main backer is French luxury sell down by all shareholders, The second part of the strategy is to broaden conglomerate LVMH – it has represented a partial exit for product offerings. 2XU currently focuses on equally strong sportswear Lazard, generating a 2x return. sportswear for both men and women but Teo credentials. Prior to joining the L Capital now plans to sees other applications for its compression fabric firm, Managing Partner Ravi 2XU: Technical sportswear further 2XU’s global ambitions. technology. “We are looking at both sports Thakran worked for Nike, while Set up in 2005, the company and non-sports categories – military as well as Uday Mehra, head of operations, was apparel makes a range of high performance compression medical segments,” he says.”So there is a lot of business director for the global sportswear brand. clothing aimed at the technical sportswear scope for product category extension.” “These people are able to bring a lot of direct market for runners, swimmers, cyclists and The expectation is growth will be domain knowledge to the company,” explains triathletes. predominately organic though M&A could play a Christina Teo, managing director with L Capital. To date the firm is mainly a wholesale role should opportunities present themselves. “And that is part of what attracted them to us: it business with a global distribution network In terms of exit, L Capital is open-minded. “In was our ability to work in partnership with 2XU covering more than 50 countries. It has online last round there was a lot of interest coming from and for the value-add we could create.” stores in Australia, New Zealand, Japan, Korea, domestic and international strategic investors,” Competition for 2XU was not in short Singapore, North America and Brazil. Teo notes. “We should keep it flexible – even a supply. The firm had already received backing “While the company has a large in presence listing is possible for a company like this.”

28 avcj.com | December 10 2013 | Volume 26 | Number 47-48 Dwight Poler | Industry Q&A [email protected] Opportunities in volatility Dwight Poler, managing director with Bain Capital in Europe, on the openings created by economic volatility in the euro zone and supporting portfolio companies that seek expansion in Asia

Q: To what extent has economic Japan is the lowest growth fourth, supplying components volatility in Europe created an market in Asia but it has been to the automotive industry, opportunity for PE? one of the most interesting we have transformed to an A: Right now owners of assets are markets for us. Most people look Asian company serving its key re-adjusting to low growth in the at Japan and say, ‘Low growth, customers. The headquarters long term, which means they are very difficult to do business, very recently move to Singapore and increasingly ready to sell. When expensive place to operate – do the business will likely be listed it was at the bottom, they didn’t I really want to house a full team or sold in Asia. want to sell. When there were there?’ We have 15 professionals no debt markets, they didn’t in Japan and the ability to Q: To what extent is that now want to sell to private equity do transformational change, part of the deal pitch? because private equity wasn’t in creating huge equity gains as A: For Bain Capital in Europe, the best shape to buy. But now we did with Domino’s. Very few our global reach is core to our you have solid debt markets and people have that capability so it proposition. This summer we equity markets, so valuations makes Japan a great place for us “We can get CEOs bought FTE Automotive, a are reasonable. Sellers can have to invest. Germany-based automotive more confidence to offer assets. and purchasing clutch actuation systems The most important thing for Q: The euro zone has been manufacturer, which had us is being able to see lots of described as a “bad marriage.” people together been supported by a French things from which to pick. If you Is this accurate? to learn from owner. Yet much of their can source a lot of interesting A: I personally believe the euro growth opportunity is in the things then you have a greater zone will hold together. The each other or developing world. Our portfolio opportunity to find something fact it held together under source together” team working on it included within that pool you want to buy. immense pressure 3-4 years ago the former CEO at Skoda China, is a testament to the true will to a German with a long history Q: Which markets – national or stay together – a commitment cost advantage Asia has versus at Volkswagen, who has been sub-regional – are the most beyond economics and politics Europe. But the challenge is incredibly impactful getting attractive in Europe? – as well as the true inflexibility not to be underestimated. them into developing markets. A: When you look beyond just of unwinding the euro. That said, Companies find it hard to growth, to the price required to from a fund perspective we are identify the right partners and Q: Chinese companies are buy growth, that attractiveness not just tied to the future of the create relationships where increasingly interested in is very dynamic. The value of euro. We invest across Europe you commit enough to each buying assets in Europe. How being a pan-European fund is with a disproportionate focus on other that you actually make much activity do you see? huge, as it gives flexibility to Europe-based companies that progress. Each of our retailers A: We have seen more looking, seek value for growth as that have a global presence, because wants to do sourcing from Asia; but not yet as much buying. I equation changes. A lot of LPs one of our great comparative our product companies seek lived in Tokyo in 1988-1990 and were seduced by single country advantages is that we are global. production there. We can get it was a similar situation: you funds but many now realize that, We are attractive to companies CEOs and purchasing people had some very strong Japanese particularly among managers that have a strong European core together to learn from each potential buyers and it took in North European markets, but maybe want to tap the US other or source together. One of quite a while before they were much of the positive gains were market for growth or move their the best examples of dramatic comfortable buying in the US just market tailwinds. In fact, cost base to Asia to be globally transformation would be FCI, and Europe. Once they got more you might have gotten more competitive. which we bought from Areva. understanding of how to operate portfolio alpha out of a great PE It was based in France, served in these markets the acquisition manager in Italy or Spain than Q: How many European portfolio very cyclical end markets in pace picked up. We haven’t seen a weak manager in the Nordics. companies are increasing their automotive and technology, that yet from China, but I do So there is not just one single exposure to Asia? and the financing markets believe it will happen. We have “best geography” because, as A: It was the late 1990s when didn’t like it all. We worked on many occasions worked in an investor, you have to get that focus turned to tapping with each division, sold two partnership with Chinese buyers balance of price and growth. It’s higher demographic-growth of them to trade buyers and to look at US and European identical to Asia in that sense. markets and leveraging the one to a sponsor, and the assets.

Number 47-48 | Volume 26 | December 10 2013 | avcj.com 29 sAVE THE DATE! Announcing The... 27th AnnuAl AVCJ PriVAte equity & Venture avcjforum.com Forum 11-13 november 2014, hong Kong

The AVCJ Asian Private Equity and Venture Forum Forum Highlights 2013 in Hong Kong was our best attended to date. Here

1,000+ is a snapshot of this year’s truly memorable event… Attendees Customer Experience Polls How would you rate this event compared to other Private Equity events in the region? 550 Organisations Better

The same 88% 12% Forum Highlights 280 Visit online now: avcjforum.com Limited Partners How would you rate the content that was presented? Execellent

Good 41% 158 Speakers Average 3% 56%

“ I attendedLimited several conferences Partners’ like SummitAVCJ or other 33 Countries represented conferences and I think it might be the best, that’s why I came from 95 Beijing Attendees to attend from this conference. 19 Countries this is the grandfather of all private equity events. tony Wei Wang, Partner, Zhonglun W&D law Firm” Chairman / CEO / USA & Canada U.K. China Hong Kong Managing Partner 4% 4% 33% 20% Managing Director / 8% Germany South Partner 7% Korea 3% Director / Switzerland MostChief Representative Popular Live Poll “ 32% 2% 19% Saudi Arabia What wouldPrincipal be the / VP most important criteria for 2% And frankly your business [AVCJ], was the GP selection going forward? Malaysia Investment focus/ 41% 2% diversify portfolio Singapore Strong track 10% 14% recordVenture Capital Summit Co-investment Rest of APAC 9% opportunities By CoUntRy 41% Attractive terms 125 Attendees15% from organisation that helped build the Pe business. and fees 20 Countries There are now plenty of conferences in all markets but AVCJ in HK remains one “ General Partners 34% of the few in the world we always try to join. Limited Partners USA & Canada U.K. China Hong Kong 31% 3% 21% 33% Service Provider 14% 27% South ” Investment Banks Korea Juan Delgado-Moreira, Managing Director and Head of International, HaMilton lane22% 2% 5% ” Placement Agents H Chin Chou, Chief executive Officer,MO rgAn StAnlEy PriVAtE Equity ASiA 1% Corporates 3% Saudi Arabia Associations 6% 3% Other visit us at Malaysia 5% avcjforum.com 2% Australia Singapore 3% 11% PE Leaders’ Summit Rest of Europe 4% Rest of APAC 4% By CoUntRy 403 Attendees from 28 Countries General Partners Limited Partners U.K. China Hong Kong 29% USA & Canada Service Provider 2% 12% 43% 10% Investment Banks 32% South 4% 24% Korea 2% Placement Agents Resources Available Now! 1% India Japan Corporates 2% 4% event review 1% Middle East NEW Government 1% 2% Associations 4% Malaysia Other 4% 2% Australia Singapore 4% 11% Rest of Europe including a full list 4% Rest of APAC 3% By CoUntRy visit us at of attendees avcjforum.com 1,000+ Attendees

NEW Presentations 550 organisations from Keynote Speakers

280 Limited Partners

158 Speakers

33 Countries represented

NEW Photo Gallery of the AVCJ Conference in Hong Kong consistently the event convenes“ the world’s most significant investment firms and thought leaders. it has become the premier investor event in Asia for GPs and LPs to meet and share ideas.” Partnership Opportunities: Ken Hao, Managing Partner and Managing Director, SilVEr lAKE Email Alexis: [email protected] sAVE THE DATE! Announcing The... Profile [email protected] 27th AnnuAl AVCJ PriVAte equity & Venture avcjforum.com Forum 11-13 november 2014, hong Kong Supersized ambitions For the last 12 years IDG Ventures’ Henry Nguyen has played a role in the opening up of Vietnam, from The AVCJ Asian Private Equity and Venture Forum Forum Highlights helping launch its first VC fund to introducing an the World’s most iconic fast food brand 2013 in Hong Kong was our best attended to date. Here

1,000+ is a snapshot of this year’s truly memorable event… Attendees Customer Experience Polls How would you rate this event compared to other Private Next year the golden arches will the country and lot of entrepreneurial energy.” Equity events in the region? 550 Organisations Better

The same 88% 12% Forum Highlights extend over Vietnam for the first time as After two years Nguyen got his next big 280 Visit online now: avcjforum.com Limited Partners How would you rate the content that was presented? Execellent McDonald’s opens it first restaurant in the opportunity when he met Pat McGovern, the Good 41% 158 Speakers Average 3% 56% country. For better or for worse, the arrival of founder of International Data Group (IDG) and “ I attendedLimited several conferences Partners’ like SummitAVCJ or other 33 Countries represented conferences and I think it might be the best, that’s why I came from 95 Beijing Attendees to attend from this conference. the iconic brand marks a pivotal moment the founder of IDG Ventures. McGovern was on his 19 Countries this is the grandfather of all private equity events. tony Wei Wang, Partner, Zhonglun W&D law Firm” Chairman / CEO / USA & Canada U.K. China Hong Kong Managing Partner 4% 4% 33% 20% Managing Director / 8% Germany South country’s history – for Henry Nguyen, managing first visit to Vietnam and connected with Nguyen Partner 7% Korea 3% Director / Switzerland MostChief Representative Popular Live Poll “ 32% 2% 19% Saudi Arabia What wouldPrincipal be the / VP most important criteria for 2% general partner of IDG Ventures Vietnam, it marks through the latter’s involvement with the And frankly your business [AVCJ], was the GP selection going forward? Malaysia Investment focus/ 41% 2% diversify portfolio Singapore Strong track 10% 14% recordVenture Capital Summit the culmination of over a decade’s work. American Chamber of Commerce. Co-investment Rest of APAC 9% opportunities By CoUntRy 41% Attractive terms 125 Attendees15% from organisation that helped build the Pe business. and fees 20 Countries There are now plenty of conferences in all markets but AVCJ in HK remains one “ General Partners 34% ”In many ways – and this may sound odd for “We up ended up getting to know each other of the few in the world we always try to join. Limited Partners USA & Canada U.K. China Hong Kong 31% 3% 21% 33% Service Provider 14% 27% South ” Investment Banks Korea Juan Delgado-Moreira, Managing Director and Head of International, HaMilton lane22% 2% 5% ” Placement Agents H Chin Chou, Chief executive Officer,MO rgAn StAnlEy PriVAtE Equity ASiA 1% a hamburger restaurant – its arrival is a stamp chatting at a breakfast and later over lunch,” says Corporates 3% Saudi Arabia Associations 6% 3% Other visit us at Malaysia 5% avcjforum.com 2% Australia Singapore 3% of approval for the country,” says Nguyen, who Nguyen. “We shared our thoughts and ideas 11% PE Leaders’ Summit Rest of Europe 4% Rest of APAC 4% By CoUntRy 403 Attendees from 28 Countries was recently announced as McDonald’s Vietnam about progress and that was the genesis of our General Partners Limited Partners U.K. China Hong Kong 29% USA & Canada Service Provider 2% 12% 43% 10% Investment Banks 32% South partner to bring the brand the country. fund.” 4% 24% Korea 2% Placement Agents Resources Available Now! 1% India Japan Corporates 2% 4% event review 1% Middle East NEW Government 1% 2% Associations 4% Malaysia That stamp of approval has particular IDG Ventures set up its office in Vietnam in Other 4% 2% Australia Singapore 4% 11% Rest of Europe including a full list 4% Rest of APAC resonance for Nguyen who, despite being 2004 and the launched a $100 million maiden 3% By CoUntRy visit us at of attendees avcjforum.com Vietnamese by heritage and birth, spent his fund the same year – the country’s first ever. “We 1,000+ Attendees formative years in US. Raised in Virginia, Nguyen had to be very careful in making sure the market – like so many in his field – started as a Harvard “Today all of my older understood our role,” recalls Nguyen. “We even undergraduate. He did not find his calling in siblings are medical had to work with the media to coin a local term NEW Presentations business straight away, though. His first ambition for venture capital.” was to be a doctor. Nearly 10 years later, IDG has investments from Keynote Speakers doctors, so it was kind 550 organisations “In my family I was the youngest of four. in more than 40 companies across technology, Today all of my older siblings are medical of a family calling” media, telecommunications, and consumer doctors,” says Nguyen, “so it was a kind of a family sectors. A second Vietnam fund was launched in calling.” 2011 with a target of $150 million. After earning a BA in classics and completing company, Medschool.com. This was 1998, the 280 Limited Partners pre-medical qualifications, Nguyen followed his peak of dotcom boom, and Nguyen, still a fresh Bringing the Big Macs family to Chicago and attended Northwestern graduate, was raising his first round of venture Nguyen recalls often being asked why there was University Medical School and the Kellogg School capital funding. Backing came from GE Capital no McDonald’s in Vietnam and it was during this of Management, earning an MD and an MBA. It and Apax Partners. period that he connected with the restaurant was during this period that he and his classmates “It was an interesting experience just to be chain. This wasn’t his first attempt: he reached 158 Speakers launched their first enterprise. “In the beginning a part of that,” he says. “Going from a bootstrap out on his first trip back home to Chicago after we were just putting together our class notes business to a company raising formal capital, moving to Asia, visiting the company’s global and study materials and sharing them with each especially at a time when there was so much headquartered in Illinois, but there was little other,’ says Nguyen. “And then we realized a lot of disruption and so many industries were being interest at the time. Countries represented other people were asking for them.” brought to the internet.” “I basically did a door knock and met some 33 What had started as Nguyen and his friends of the executives in person,” says Nguyen. “They trading notes gradually evolved into a business Back to Vietnam told me then that internally they had made no NEW Photo Gallery of in self published study materials – S2S Medical After stint working as an associate at Goldman decision to open a new market so I kind of stayed Publishing – and it spread to 130 universities. By Sachs, Nguyen decided to seek out his family persistent with them over the next 10 years, the AVCJ Conference in Hong Kong consistently the event “ his third year, Nguyen and his friends made their roots and returned to Vietnam in 2001. He checking in once in a while.” convenes the world’s most significant investment firms first exit, selling the business to Blackwell Science. worked for medical charity Operation Smile, The persistence paid off as McDonald’s and thought leaders. it has become the premier investor “If I look back on my life I have been an treating children suffering from cleft palate, but eventually said yes to the idea and chose Nguyen Partnership Opportunities: entrepreneur since I was eight years old with his entrepreneurial instincts were not far behind from a pool of around a 1,000 applicants to be event in Asia for GPs and LPs to meet and share ideas. my first newspaper route,” he says. “All these side and he soon began making angel investment in its local partner. Needless to say, he is confident ” businesses I had were a fun diversion from my local start-ups. of the positive impact company will bring. Ken Hao, Managing Partner and Managing Director, SilVEr lAKE Email Alexis: studies. Now I look back I can see that those were “To cut a long story short, what was meant to “It is symbol of something to people outside,” [email protected] the more formative things I did and being in be a three-month stint ended up becoming six says Nguyen. “In the months after the global school was the diversion.” months, then 12 months, and here I am 12-and- announcement was made I never had more Nguyen and his partners then put their own a-half years later,” he says. “I sensed there was real interest or enquiry about Vietnam than I did in all capital into building a medical distance learning impetus for progress and market liberalization in my years here.”

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