Safe Hands? Private Equity Targets Emerging Asia’S Succession Planning Opportunity Page 19
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Asia’s Private Equity News Source avcj.com November 04 2014 Volume 27 Number 41 Safe hands? Private equity targets emerging Asia’s succession planning opportunity Page 19 PE returns: On target? Page 11 Names: A brand issue Page 29 VC pioneer Tim Draper Page 39 CONFERENCE SPECIAL ISSUE AVCJ PRIVATE EQUITY AND VENTURE CAPITAL FORUM HONG KONG 2014 Anything is possible if you work with the right partner Unlocking liquidity for private equity investors www.collercapital.com London, New York, Hong Kong CONTENTS EDITOR’S VIEWPOINT 31 Eastern perspective: Feng shui masters rate private equity firms’ Chinese names 05 Asian PE will continue to grow in asset terms, but slower and in multiple directions 33 Western perspective: How branding consultants help find the magic formula NEWS 07 Carlyle, China Life, DCM, Evercore, Hony, TECHNOLOGY J-Star, SoftBank, PEP, Warburg Pincus The Palo Alto prescription PERFORMANCE 35 Asia’s innovation hubs are aspiring to become the next Silicon Valley, but some Under pressure are more global than others 11 To varying degrees unimpressed by Asian PE performance, LPs are asking more of 38 Venture capitalists want government to their managers on the operations side facilitate start-up development, not try and pick winners directly SUCCESSION PLANNING Family ties INDUSTRY INTERVIEWS 19 Private equity investors eye buyout opportunities as emerging Asia’s aging 16 Olver Gottschalg of HEC School of founders struggle to find credible heirs Managment talks PE performance 21 Case study: Mekong Capital and Vietnam’s 27 Howard Marks of Oaktree Capital AA Corporation Management on risk and reward 25 Case study: Bain Capital and Dominos Japan 39 Tim Draper of Draper Associates on exporting the Silicon Valley model BRANDING What’s in a name? 29 PE firms attach increasing importance to finding the right name. This is no easy task when operating in multiple markets Number 41 | Volume 27 | November 04 2014 | avcj.com 3 De-risk your transaction with the market leaders in M&A insurance solutions Risk Capital Advisors (RCA) is the market leader in advising on and structuring insurance solutions for transaction risks. With a wealth of experience across Asia-Pacific and an impressive track record of successful transactions, RCA provides expert, commercial advice on a range of transaction risk strategies and insurance-based solutions. As the largest team in Asia-Pacific, the RCA team has a combined 60+ years of Private Equity, M&A and insurance experience, and is the preferred advisor to structure transaction risk insurance solutions. In the past 5 years, the RCA team has successfully advised on and closed more than 450 transactions, making RCA the most experienced team in the Asia Pacific region. The transaction risks we provide advice on include: Warranties & Indemnities Tax Litigation Prospectus Liability Environmental Contingent Liabilities For more on how RCA can help contact Rick Glover on +61 401 123 235, [email protected] or visit riskcapital.com.au LONDON I MELBOURNE I SYDNEY EDITOR’S VIEWPOINT De-risk your transaction [email protected] Managing Editor Tim Burroughs (852) 3411 4909 Staff Writers Andrew Woodman (852) 3411 4852 with the market leaders in Winnie Liu (852) 3411 4907 Onwards and Creative Director Dicky Tang Designers Catherine Chau, Edith Leung, Mansfield Hor, Tony Chow M&A insurance solutions Senior Research Manager upwards Helen Lee Research Associates Herbert Yum, Isas Chu, ONE OF THE HOTTEST TOPICS IN LAST their brands out. Jason Chong, Kaho Mak year’s AVCJ Forum was whether the Asian private In terms of investments, naysayers having Circulation Manager equity and venture capital industry can remain been predicting, for years, that with no financial Sally Yip on its growth trajectory. The region’s assets under crisis and China’s growth slowing, the golden age Circulation Administrator Prudence Lau management have expanded 12-fold in the last of Asian private equity is over. This may be partly Subscription Sales Executive 20 years. While there is no doubt the industry true but it should be remembered that capital Jade Chan can also drive a market. Bring together some of will continue to get bigger, the nature of the Manager, Delegate Sales growth is likely to alter course – in terms funds, the smartest people in the financial world and Pauline Chen investments and people. tie compensation to their ability to make money Director, Business Development Risk Capital Advisors (RCA) is the market leader in advising on and structuring insurance solutions for Private equity has graduated from its for investors and you will see results. Investment Darryl Mag transaction risks. With a wealth of experience across Asia-Pacific and an impressive track record of position as head of the alternatives asset class to cycles will continue to give and take away, but Manager, Business Development successful transactions, RCA provides expert, commercial advice on a range of transaction risk strategies spearheading wider private market investment Alibaba Group’s IPO and the Oriental Brewery Anil Nathani, Samuel Lau strategies. Just a few years ago, most private trade sale are proof that multi-billion dollar exits and insurance-based solutions. Sales Coordinator equity firms had a focused approach with small are still possible in today’s market. Debbie Koo adjustments based on the size of their current Private equity is – and always will be – a As the largest team in Asia-Pacific, the RCA team has a combined 60+ years of Private Equity, M&A and funds. This was true for both buyout funds and relationship business, with people the most Conference Managers Jonathon Cohen, Sarah Doyle, insurance experience, and is the preferred advisor to structure transaction risk insurance solutions. venture capital players. important asset. As many of the founding fathers Conference Administrator Today the landscape looks very different. Most give up day-to-day duties to pave the way for a Amelie Poon of the global firms with a presence in Asia have younger generation, we may see a short-term Conference Coordinator In the past 5 years, the RCA team has successfully advised on and closed more than 450 transactions, Fiona Keung, Jovial Chung making RCA the most experienced team in the Asia Pacific region. diversified their offerings. Buyout strategies were decline in the number of so-called “personalities.” altered to accommodate growth capital years But the void will eventually be filled as other Publishing Director ago, but firms are now expanding up and down investment professionals rise to “rock star” status. Allen Lee The transaction risks we provide advice on include: the capital structure. Distress, mezzanine and And with the industry expanding its focus, there Managing Director Warranties & Indemnities structured credit strategies are in place and in will be more people filling the space. Jonathon Whiteley Tax some cases real estate too. Several global players As somebody who has observed the industry no longer describe themselves as “private equity grow from a small part of the region’s financial Litigation firms,” preferring something along the lines of services sector to the behemoth it is today, Asian Prospectus Liability Incisive Media “private markets investor.” private equity will find ways to grow. Unit 1401 Devon House, Taikoo Place Environmental As for venture firms, they have diversified 979 King’s Road, Quarry Bay, Hong Kong Contingent Liabilities their funds to include larger growth capital deals T. (852) 3411-4900 as well as seed-stage investments. Most remain F. (852) 3411-4999 E. [email protected] focused on specific markets, although Sino-US Allen Lee URL. avcj.com strategies are popular in some quarters, while a Publishing Director Beijing Representative Office few of the bigger US firms have been franchising Asian Venture Capital Journal No.1-2-(2)-B-A554, 1st Building, No.66 Nanshatan, For more on how RCA can help contact Rick Glover on +61 401 123 235, Chaoyang District, Beijing, People’s Republic of China Private equity funds under management in Asia T. (86) 10 5869 6203 [email protected] or visit riskcapital.com.au F. (86) 10 5869 6205 600,000 E. [email protected] 500,000 400,000 The Publisher reserves all rights herein. Reproduction in whole or 300,000 in part is permitted only with the written consent of AVCJ Group Limited. US$ million 200,000 ISSN 1817-1648 Copyright © 2014 100,000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD Source: AVCJ Research LONDON I MELBOURNE I SYDNEY Number 41 | Volume 27 | November 04 2014 | avcj.com 5 Premier buy-side executive search Jag Dhaliwall +65 6329 9658 [email protected] Will Tan +65 6329 9659 [email protected] www.principle-partners.com Asset Management Hedge Funds Private Equity NEWS GLOBAL Hony seeks healthcare, COFCO plans IPO for PE- restaurant buyouts backed businesses Warburg Pincus raises $4b China-focused GP Hony Capital is seeing more Chinese agricultural conglomerate COFCO buyout opportunities involving healthcare and Corporation is looking to list some of its assets, global energy fund restaurant chains and it has created two sector- including Noble Group’s agribusiness unit and Warburg Pincus has closed its first dedicated focused operational teams to consolidate these Dutch grain trader Nidera Holdings, both of energy fund at the hard cap of $4 billion, industries. which were acquired with PE support. comfortably exceeding the $3 billion target. The Speaking at his firm’s annual general meeting new vehicle, which launched in November 2013 in Shanghai, Hony CEO John Zhao noted that DCM leads $30m Series B and reached a first close in May 2014, will be a the government is deepening industry reforms companion fund to the $11.2 billion Warburg in order to open up the domestic market and for gay social app Pincus Private Equity XI.