Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
Quadrangle û which has private equity, public equity and asset management divisions û has around $6 billion in assets under management mostly in the US. The firmÆs focus in Asia will be private equity investments, with the flexibility to do privately negotiated investments in public equity (Pipe).
Edward Sippel, a managing principal of Quadrangle, heads the Hong Kong office. He has more than 10 years of private equity experience in Asian markets. Since joining Quadrangle in 2007, Sippel has worked in the New York office preparing for the Asia office launch and serves as an active member of the companyÆs global investment team.
Sippel has lived and worked in Asia since 1997. Prior to joining Quadrangle, he was a managing director and partner at TVG Capital Partners, a private equity firm based in Hong Kong focused exclusively on investments in the telecom, media and technology sectors throughout the region. Before TVG, Sippel was with The Asian Infrastructure Fund (AIF), a private equity firm based in Hong Kong, where he assisted in managing the telecommunications portfolio. Before AIF, he worked in Morgan StanleyÆs global communications group in New York.
QuadrangleÆs investments include: men's lifestyle media company Alpha Media Group; US cable operator Cablevision; North America and Latin America movie theatre operator Cinemark; specialised professional website provider Dice Holding; motion picture producer and distributor Metro-Goldwyn-Mayer Studios; Spanish alternative telecommunications operator ONO; and major German commercial television broadcaster ProSiebenSat.1.
So far, Quadrangle has no private equity investments in Asia. The firm expects to explore opportunities across the region.
ôOur deal flow is very broad based. We are seeing interesting opportunities right across Asia in various sub-sectors of the media and communications industries,ö Sippel says. ôWith respect to volume of deals, we are seeing the largest number of deals in China and India.ö
Quadrangle's expansion into Asia has been planned for some time. In the past year, Sippel and three Hong Kong-based investment professionals were based in New York to familiarise themselves with Quadrangle's investment processes, global portfolio, and relationships prior to setting up the Asian operations. Sippel says entering Asia now is good timing.
ôWe believe that the current market dislocation will improve the prospects of finding attractive investment opportunities in the region over the medium-term,ö Sippel says.
Sippel cites the advantages of being in Asia now. Asset prices are coming down and distressed shareholder opportunities are emerging. Initial public offerings (IPOs) are difficult in the current environment, forcing companies who require capital to fund their business plans to look to other sources of capital, such as private equity. Shareholders seeking liquidity are increasingly looking to private equity given the challenges of a public market listing in today's environment. The sectors Quadrangle focuses on are still high-growth across Asia and companies in these industries still require capital to fund that growth; the current global liquidity crisis in the financial markets gives these companies few options to fund that growth.
ôGiven Quadrangle does not have any existing investments in Asia we are in the unique position of being able to focus 100% of our time on sourcing attractive opportunities and not portfolio management in today's challenging environment,ö Sippel says.
It is unlikely that Quadrangle will aggressively pick up private equity investment in Asia, however, given the current market conditions globally.
In a recent interview posted on the Quadrangle website, Steven Rattner, the New York-based founder and managing principal of the firm, says private equity investments, especially large deals, will likely be put on hold during this period of uncertainty.
ôUntil you know where the bottom is, until you have some sense of what you are buying, itÆs hard to do anything,ö Rattner says, referring to the private equity business in general. ôI think we are going to see periods of hiatus in private equity as everyone recognises and figures out where the value is.ö
Rattner adds that it will be difficult to raise capital or borrow funds for private equity deals under the current environment.
Meanwhile, Quadrangle does not have any Asia-dedicated equities fund and is not intending to launch one. The firm invests in Asian equities through its global funds.
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