The biggest challenge for private equity investors in Asia these days is finding talent both for managing companies and portfolio allocation/management, say asset managers and owners.
The Canada Pension Plan Investment Board (CPPIB) will be as aware of this as any – the C$189 billion ($183 billion) fund has been building up its investment team in Hong Kong since it set up the office in 2008.
It wants to further strengthen its PE capabilities as it looks to boost its Asian exposure by up to seven times in the coming years. CPPIB has nine investment professionals in Hong Kong and plans to expand by at least 30% this year.
“We are looking to add junior and senior resources, particularly around the direct and co-investment strategy”, says Kim Suyi, CPPIB’s Asia head of private equity*. “We plan to be in Asia for the long-term, and building the right team is important.”
But while she is very bullish on the future of the region’s PE industry, Kim points to the difficulty of finding and hiring the right staff.
“We will see the emergence of industry leaders in the Asian PE market similar to in developed markets,” she says. “Also, we think there will be an increase in sizeable and control deals and lowering of certain barriers like regulations or capital markets.
“The main barrier though will continue to be identifying and attracting the right talent both in terms of managing companies and investment professionals.”
It’s even tougher for firms in emerging markets that focus on their domestic economies.
“Access to good management talent is our single biggest challenge,” says Patrick Walujo*, co-founder and managing director of Northstar Group, a Singapore-based PE firm with $1.2 billion in AUM. “The Indonesian economy is growing very fast so there are plenty of opportunities.
“The talent pool is not growing as fast as PE investment opportunities or demand [for them]. So we have to be smart about how we identify and train management candidates.
“The best option is to have world-class Indonesian talent, because many businesses are very local and incorporate lot of local issues," he adds. "But if it’s not available and we need to supplement certain functions, then we may look to international expertise.”
It’s not been difficult for Northstar to attract the right people once it has identified them, says Walujo, apart from in very specialised sectors. The issue is insufficient supply. There has always been a substantial proportion of Indonesian students that study abroad and then return home, he notes. “But the absolute number of them is not enough – we need more.”
And Northstar – which invests around 75% of its AUM in Indonesia and 25% elsewhere in Southeast Asia – is increasingly having to compete for Indonesian talent with rising demand from outside the country.
*Kim Suyi and Patrick Walujo have been shortlisted for AsianInvestor’s 25 most influential people in Asian private equity for a feature in the upcoming September issue.