The two-day Asia PE-VC Summit this year produced a clear message from senior asset allocators and fund managers: The macro story may explain the opportunity, but it is the evidence that earns conviction.
Asia has always been a tough sell as strong GDP growth has not really translated into the kind of returns allocators expected. The reasons are familiar: Shallow M&A markets, an uneven IPO market, and family-owned businesses that still need institutionalising, to name a few.
Despite the challenges, Hemal Mirani of HarbourVest says, “There are deals that have gotten done in this part of the world that are absolutely fabulous. Look at the returns that have been earned at the deal level. Risk has been taken, and returns have been generated. The big question is, how does that come through on a slightly more consistent basis.”
Across the summit, LP discussions offered a useful vantage point into how the case for Asia is being assessed today.
What LPs want to see
For LPs, the spotlight is increasingly on what managers can demonstrate with the selection criteria circling institutional infrastructure, local teams, realisations and performance through periods of stress.
To be clear, none of these are growth metrics. As Affirma Capital’s Nainesh Jaisingh puts it, “You haven’t seen this combination of tectonic changes, from COVID to geopolitics to AI. Asian PE is going through Darwinian moments. It is about who adapts the best.”
This period of profound structural change therefore seeks managers who can demonstrate value creation beyond what the economic cycle delivers.
On the broader Asia opportunity, Mirani suggests the diversification approach to “create a portfolio that will give you the best of this region.”
Hamilton Lane‘s Kerrine Koh pointed to the move towards larger pan-Asian platforms while maintaining that there is still room for single-country funds in the mid-market, particularly in Southeast Asia, which is currently enjoying the China+1 tailwind.
The shift in the economic environment is also influencing how some of the institutional investors think about their portfolios. Take Japan, for instance. Yoshi Kiguchi, CIO at the Pension Fund of Japanese Corporations, said rising inflation is pushing Japanese institutional investors beyond nominal capital preservation towards increasing allocations to private markets to drive long-term growth.
Alternatives already comprise about 20% of corporate pension AUM and are set to grow, particularly in the US, India and Southeast Asia.
And how does a pension fund evaluate managers? Kiguchi says the fund prioritises a GP team that shows stability and a clear history of cash returns.
Interestingly, the same scrutiny applies to emerging managers.
While institutional capital is available, investors want to see a clear edge, sufficient addressable market, differentiation, strong GP alignment, team quality and proven deal-level experience. For newer funds, limited realised track records and DPI can make that harder to demonstrate.
Yet the market for emerging managers has not disappeared. Peter Rosenbloom at Hunter Point Capital pointed to growing sophistication among family offices and continued interest in specialised managers. First-time funds may show higher median returns, but those figures can be influenced by vintage and selection biases, while limited realised DPI and longer fundraising cycles remain challenges.
The same emphasis on outcomes extends to the broader question of exits. Michael Liu of Future Standard said China’s revival will depend partly on stronger capital markets and exit activity, while continuation vehicles are offering established GPs another route to realisations.
For LPs, however, realisations are not the only test. Fi Dinh of MUFG Investor Services highlighted transparency and how managers respond under stress, including around NAV financing.
The relationship between LPs and GPs is part of that changing landscape too. Danantara Indonesia’s Weihan Wong pointed to co-investments and knowledge transfer as key elements in a partnership.
Amid this backdrop, Asia will continue to see a fight for capital allocations.
A significant amount is still heading to the US, particularly the mid-market, where established track records of consistent returns remain attractive. That is unlikely to change overnight.
But the conversations in Singapore suggest that Asia’s long-term potential remains intact. What is changing is the standard against which that potential is being assessed.
Building private wealth market takes more than just products
Private markets may be opening up to a broader wealth audience, but access is only one part of the proposition. Investors need to understand what they are buying, how the structure works and what role it is intended to play in a portfolio.
There is no dearth of products and fund managers can curate different solutions. But the importance lies in finding the right narrative and relevance for the market environment.
That becomes harder when investors do not fully understand the characteristics of private assets. The issue is not simply explaining a product at the point of investment. It is also about what investors expect from it, particularly when markets become volatile.
The education piece also extends to expectations of returns. Investors may compare private assets with individual public securities, while traditionally expecting a premium for the illiquidity associated with private markets.
For GPs, the education piece extends beyond the bank’s home office and diligence team. Relationship managers and end clients also need a similar level of quality information, including transparency on the portfolio and the underlying strategies within a private equity or infrastructure fund.
That puts the question of bench strength into the discussion. For boutique private asset managers, in particular, there is a question of how many people they have around the world to help educate the wealth market.
Success in the wealth market is not simply about growing AUM but about broader adoption, deeper relationships with banks and the ability to build those relationships across multiple products over time.
As private markets reach further into wealth, the product is only one part of the proposition. For managers, the broader opportunity lies in building the relationships, infrastructure and support around it.
Top PE Developments
Fundraising
Thai private equity shop Lakeshore Capital has closed its third flagship fund at its $305 million hard cap, attracting a mix of new and existing investors, including asset managers, sovereign wealth funds, insurance companies, funds-of-funds and family offices.
Carpediem Capital, an India-focused mid-market PE firm, is set to launch its third fund targeting about $210 million from a mix of domestic and international LPs.
Kuala Lumpur- and Tokyo-based Bee Alternatives has closed its seventh secondaries fund at over $150 million, within its target range of $150-$200 million.
IPO and exits
The planned initial public offering of Philippine digital wallet GCash could become a watershed moment for private equity exits in Southeast Asia, said Vishal Mahadevia, head of Asia Private Equity and global co-head of Financial Services at Warburg Pincus.
Korea Investment Corp. is looking to sell private equity stakes worth more than $1 billion, with PJT Partners advising on the potential transaction, Bloomberg News reported. The potential sale comes as secondary transactions gain momentum globally.