Western investors' growing interest in boosting their Asian exposure* is well documented, as is booming Asian demand for property in cities such as London and New York. But Asian investors are seen to be increasingly taking direct private stakes in European companies.
In fact, there is more of this type of demand for such assets than there is from rich Europeans for Asian exposure, said Ivo Bartoletti, Singapore-based chairman and chief executive of Oclaner Asset Management, which works extensively with wealthy families.
Asian investors are looking at buying private stakes in good-quality small- and medium-sized companies with decent cashflows, said Bartoletti – in particular, industrials that are profitable and want a partner to help them expand into Asia.
These companies like family and sovereign capital because these types of investors do not necessarily seek an exit after five or seven years, he noted. Such deals tend to be worth $50 million upwards, he said, and are being done notably by Indonesian, Malaysian and Singaporean investors.
This is happening for much the same reasons that Europeans want to allocate more to Asia: diversification and Asians’ greater familiarity and interaction with international businesses, but also attractive current asset valuations.
Bartoletti declined to provide examples of current valuations of such companies in Europe versus historical prices, or any examples of such deals.
The unnamed Asia head of a Swiss FO in Hong Kong agreed that Asian investors are showing interest in gaining more exposure to Europe. It makes sense for investors in the region to diversify geographically, he said, as that would help mitigate the impact of any future regional financial crises.
But they can face challenges, and that is something European FOs in Asia can help with. For example, he has set up a ‘family office group’ for networking and the swapping of ideas between both Western and Asian families in the region.
“Chinese investors can sometimes have difficulty investing into Europe [for political and regulatory reasons]; that’s something we can potentially help with,” he added.
Families whose expertise lies in, for example, the consumer sector can find it useful to swap information with those that have made their money in energy or real estate.
Oclaner AM is not the only firm set up by Europeans to be attracting Asian-domiciled family clients. London-based MFO SandAire set up an office in Singapore in mid-2013 and has brought in ultra-high-net-worth Asian-domiciled families. Singapore head Nadav Lehavy declined to say how many such families have come on board.
* The cover story in the upcoming (September) issue of AsianInvestor will focus on wealthy European families' growing interest in Asian assets and the expansion of offices into the region as a result.