This online issue of the Asia Private Equity Review is made available with abbreviated content. To read the full content together with more in-depth news, perspectives, and analysis, please subscribe or contact us to purchase back issues.

August 2006 Issue
In Brief

Management Fees are the Life Blood of funds of funds firms. Analysis on the modus operandi of this segment Feature
Islamic Capital is Defining its Position in Asian private equity, accounting for a capital pool of US$1.7 billion Analysis
Second Infrastructure Fund for South Korea in the year underscores abundant infrastructure-related opportunities in the Land of Morning Calm Funds
The Deal Completion Bar is getting higher in China as the list of uncompleted deals grows China Corner - News
Merger of China Electronics Retailers that signals possible further consolidation of consumer goods markets in the country China Corner
Newbridge Faces Herculean Task in the shareholder structure overhaul of Shenzhen Development Bank China Corner
WNS is More Than a Success Story for BPO as it is also one of the very first control deals in India India Corner - Divestment
Done Deal Pace Accelerates in India as investors seal multiple deals within short time frames India Corner - Investments
Global Focus Should be Axis of limited partners' investment strategy, according to a director of the Board of Pacific Pension Institute, indicating Japanese investors are ready to go global Japan Corner - Commentary
Content

Pan Asia
Opinions
Commentary
News
Funds
Buyouts
Growth/Expansion
Divestments

Institutional Corner

Greater China
News
Funds
Buyouts
Growth/Expansion
Technology

India Corner
News
Buyouts
Growth/Expansion
Technology
Divestments
Commentary

Japan Corner
News
Funds
Buyouts
Commentary

People on the move
Summary
Index & Exchange Rates

Insight

For a long stretch of ten years, Asian funds of funds received negligible attention from institutional investors. On the Asian private equity terrain where there had been isolated oases of profitable returns, Pantheon Capital had been the lone advocate and toiled for its Asia-dedicated fund of funds. Since the beginning of the year, the Asian private equity funds of funds landscape witnessed dramatic changes. There are currently 14 pan-Asia funds of funds established that are targeting opportunities in the region. Over 43% of them came into operation during the first half of the year (fig. 1). Would this mushrooming of pan-Asian funds of funds be a sustainable development?

In March this year, the Zurich-based Partners Group became the first funds of funds house to remove the veil that has long shielded this very private segment in private equity management. Its listing on the Swiss Stock Exchange (‘SWX’) has lent a rare opportunity for the public to understand the modus operandi of a fund of funds management firm. It was also the first public assessment on this group of fund managers.

High Appraisal

Partners Group offered 8,010,000 shares to the public, representing 30% of its 26.7 million issued share capital, with an additional 801,000 for over allotment. Its initial public offering price (‘IPO’) was set at CHF63 (US$42.21), which is not only at the upper range of the price bracket, but also an indication of an extremely positive response from the public. Encoded in Partners Group’s IPO price are investors’ valuation benchmarks for the firm. The CHF63 per share price represented 21 times the fund of funds house’s 2005 earnings before income tax and depreciation amortization (EBITDA) (fig. 2), which stood at CHF 80.1 million. It also established Partners Group’s market capitalisation as CHF1.68 billion. It equated to 14.5% of the CHF10.8 billion assets under management (‘AuM’) by the firm at the end of December.

The market capitalisation value of Partners Group is far more generous than that appraised by Vontobel Group when it took up a majority stake in Harcourt Investment Consulting AG (‘Harcourt Investment’), a fund of hedge funds management firm that is based in Zurich. The acquisition only took place three months prior to Partners Group’s debut on SWX.

In December 2005, Vontobel Group, a Swiss financial services institution, paid CHF80 million in taking up ...