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Exclusivity Matters Funds to Get a First Taste of Asian Private Equity How to Access Quality Deal Flow in Asia’S Nascent Secondaries Market Page 7 Page 15 AVCJ Private Equity & Venture Forum 2012 AVCJ Private Equity & Venture Forum 2012 London Hong Kong 11 October 2012 13 - 16 November 2012 avcjeurope.com avcjforum.com ASIAN VENTURE CAPITAL JOURNAL Asia’s Private Equity News Source avcj.com September 11 2012 Volume 25 Number 34 Editor’s ViEwpoint Is Korea’s buyout market open for business again? Page 3 PRIVATE EQUITY ASIA Nes w Blackstone, Carlyle, CICC, CLSA, CVC, GIC, Goldman, IFC, Kaiwu, Kaizen, RRJ, Nexus, Northstar, Warburg Pincus Page 4 Focus M&A ASIA Chinese courts plunge down-side protection tools into uncertainty Page 10 F unds Cathay Capital scores Sino-French mandate Page 11 L p intErViEw Allstate uses fund-of- Exclusivity matters funds to get a first taste of Asian private equity How to access quality deal flow in Asia’s nascent secondaries market Page 7 Page 15 Funds Focus China property play Cult of personality Century Bridge closes fund at $170m Page 11 Asian celebrities catch on to the PE craze Page 14 Anything is possible... There are many barriers to liquidity in private equity: complexity, transaction size, deadlines, disparate assets, confidentiality, alignment, tax, shareholder sensitivities – the list goes on. But with creativity, experience and determination ... anything is possible. Secondaries Firm of the Year for the 8th consecutive year www.collercapital.com London New York Hong Kong 33 Cavendish Square 410 Park Avenue 20 Pedder Street London New York Hong Kong Liquidity solutions for private equity investors worldwide Contact: [email protected] Desert Ad_A4.indd 3 22/03/2012 09:59 Editor’s ViEwpoint [email protected] ASIAN VENTURE CAPITAL JOURNAL Managing Editor Tim Burroughs (852) 3411 4909 Senior Editor Brian McLeod (1) 604 215 1416 PRIVATEAssociate EQUITY EditorASIA Susannah Birkwood (852) 3411 4908 Staff Writer Korea redux Alvina Yuen (852) 3411 4907 Creative Director Dicky Tang M&A ASIA Designers Catherine Chau, Edith Leung, Mansfield Hor, Tony Chow Despite a few issues, SoutH KOrea Has Post and Military Pension that are becoming Senior Research Manager always been a favored market for Asian private increasingly influential. Of course, there is also Helen Lee Research Manager equity investors. That is hardly surprising as the Korea Investment Corporation (KIC), but it’s Alfred Lam many of the best performing transactions in the overseas-only mandate means it is off limits to Research Associates history of the asset class in Asia have come out of the domestic GPs. Kaho Mak, Jason Chong Korea. It could be argued that the restructuring That’s only the tip of the iceberg, according Circulation Manager to local GPs I met. Financial institutions are Sally Yip deals triggered by the Asian financial crisis – Circulation Administrator Good Morning Securities, Korea First Bank, and so becoming active. In addition to the local banks, Prudence Lau on – transformed private equity in the region. insurance companies are searching for alpha Senior Manager, Delegate Sales This period was followed by a spate of with private equity funds. It is no wonder that Anil Nathani buyouts PE investors helped Korean companies gatekeepers and fund-of-funds have been Senior Marketing Manager grow in a meaningful way. Deals representative aggressive in this area. I’m told that virtually all Stacey Cross of this stage included Hi-Mart and Faceshop, Asia-focused fund-of-funds are now hiring or Director, Business Development both of which were exited to strategics for great have already recruited Korean professionals to Darryl Mag returns. help with market access. Manager, Business Development Around 2006, however, the country began to LP support of Korean funds also goes down Samuel Lau lose its international luster. Local conglomerates to the venture capital level. The Korea Venture Sales Coordinator began to embrace the private equity funds (PEFS) Investment Corporation, the government backed Debbie Koo structure and PE investment became a largely fund-of-funds that targets local VCs, has invested Conference Managers Jonathon Cohen, Zachary Reff, Sarah Doyle local affair, with the 2009 buyout of Oriental in more than 230 funds managed by 70 GPs. As a Conference Administrator Breweries by KKR and Affinity Equity Partners one result, Korea has become the third largest market Amelie Poon of few exceptions. globally for venture investment after China and Conference Coordinator Fiona Keung, Jovial Chung As documented in AVCJ, we are now seeing the USA. Publisher & General Manager another wave of deals, which suggest that While most of the Korean GPs I spoke to Allen Lee South Korea is coming back as a market for remain modest, all are quietly confident about Managing Director international private equity investors. Certainly, the future of the asset class in the land of the Jonathon Whiteley on my recent visit to Seoul there was a distinct morning calm. Only time can tell if South Korea Chairman Emeritus feeling of optimism among both GPs and LPs. will once again be a sweet spot for buyouts, but Dan Schwartz There are several reasons why more than its chances seem better than many other Asian $4.5 billion has been racked up in private countries. equity investment so far this year. Yes, chaebols, incisive Media particularly the smaller ones, are more willing 20th Floor, to do business with private equity. In fact, Tower 2, Admiralty Centre 18 Harcourt Road, one fund manager went as far as saying that Admiralty, Hong Kong T. (852) 3411-4900 many executives at second- and third-tier F. (852) 3411-4999 conglomerates are beginning to see PE as a E. [email protected] URL. avcj.com solution to their liquidity problems. Another key factor is the wider availability of Beijing representative office Room 1805, Building 10, financing from Korean banks. Local lenders are Allen Lee Jianwai SOHO, 39 East 3rd-Ring Road, hungry for deals and will go as far as investing Publisher Chaoyang District, Beijing 100 022, China into PEFs to help them secure business for their Asian Venture Capital Journal T. (86) 10-5869-6205 F. (86) 10-5869-7461 project finance divisions. Most of the recent large E. [email protected] transactions were executed by firms that are either local or have been doing business in Korea The Publisher reserves all rights herein. Reproduction in whole or for some time. in part is permitted only with the written consent of AVCJ Group Limited. Finally – and, in the long term, perhaps most ISSN 1817-1648 Copyright © 2012 significant – South Korea’s renewed vibrancy is a function of the fact that the country is now part of the mainstream fundraising circuit. The National Pension System (NPS) remains the biggest LP but there are others like Korea Number 34 | Volume 25 | September 11 2012 | avcj.com 3 News ASIA PACIFIC Nexus closes third India fund-of-funds, confirmed it will invest in Kaiwu’s fund at $270m new vehicle. MGPA announces first close Nexus Venture Partners has announced a final Qualcomm backs Dolphin close for its third fund at $270 million, around on Asia real estate fund $50 million more than for its previous vehicle. Browser Series B round MGPA has held a first close on a EUR500 million Investors include endowments, foundations Qualcomm’s VC arm has participated in the Series ($639 million) Asia property fund targeting and financial institutions across North America, B funding round of Dolphin Browser, a Chinese- German investors. The vehicle has so far received Europe and Asia. All major LPs in prior funds made mobile browser. In 2007, Sequoia Capital EUR85 million from three German institutions. participated in Nexus India Capital III. and Matrix Partners China jointly contributed $10 The fund - MGPA Asien Spezialfonds - is regulated million to a Series A round of funding. under German investment laws and is primarily designed for institutional investors in German- RRJ Capital invests $50m in speaking countries seeking exposure to Asian real estate markets. Chinese biotech firm RRJ Capital has injected $50 million in Chinese biotech company Triplex Biosciences, taking an AUSTRALASIA 11-19% stake in the company. The Xiamen-based company manufactures products used to detect Rival PE firm matches TPG’s and diagnose hepatitis B and C and certain $709m Billabong offer cancers from blood and tissue samples. A rival PE firm – reportedly Bain Capital – has CICC PE’s assets under offered to match TPG Capital’s A$694 million Naren Gupta, Nexus’ co-founder, told media ($709 million) buyout bid for Australian surfwear that the fundraising took a “couple of months”. management reach $2.4b company Billabong International. The Billabong The first US Securities and Exchange Commission The private equity arm of China International board maintains that neither offer reflects the (SEC) filing for the vehicle was made in late Capital Corporation (CICC) has seen its assets fundamental value of the business in the context November 2011 and sources previously told under management soar to in excess of RMB15 of a change of control transaction. AVCJ that the process was completed as early as billion ($2.4 billion). These funds include capital March. The third fund will follow the investment within the CICC Jiatai Industry Integration Fund, Lazard extends Australia strategy of its predecessors. the bank’s debut renminbi-denominated vehicle, which was established in May last year with a corporate advisory reach target size of RMB5 billion. Lazard Australia has agreed to purchase firm previously invested $15 million just over a independent corporate advisory firm O’Sullivan year ago. The company plans to use the funding China, Russia sovereign Partners. The Sydney-based player is an to nearly quadruple its headcount to 400 acknowledged media specialist and can also employees by the end of 2013. funds back forestry firm claim to have won several notable private China and Russia’s sovereign wealth funds will equity mandates, including three from KKR.
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