1. The Asia pull
A few years ago, Asia’s placement agent landscape had mainly local
players. But more global firms have moved in to address the growing
complexity of regional fundraising needs. Vicky Meek reports
Raising funds based in Asia used to be a matter of going cap in hand to local
investors for capital. Either that, or funds used mainly London or New York-
based agents if they were looking further afield for their capital.
Yet today’s fundraising market has become truly global and placement agents
have responded by setting up locally.
“Two years ago, it would have been possible to run an Asian fundraising from,
say, London,” explains Niklas Amundsson, MVision partner based in Hong
Kong. “Now, if you don’t have an Asian presence, you’re not usually invited to
pitch for mandates. So those that have been successful in the past in the
region may not be so in the future if they don’t have people on the ground.”
The placement business is seeing a shake-up as agents jostle to raise
proliferating Asia-focused funds and to tap the Asian LP market for funds
targeting markets such as Europe and the US. Some have opted for a
measured entry into the market, opening offices with one or two people;
others have committed much more resource to the region – MVision has
seven people in Asia as does Campbell Lutyens. UBS is also one of the
bigger Asian players and Eaton Partners has been operating in Asia since
2007.
These developments are starting to have an effect on the local agents. “The
existing local boutique placement agents, which tend to be small, may have
long histories in the region, but are now feeling competitive pressure,” says
Javad Movsoumov, executive director for UBS’s private funds group.
“However, it’s still the case that the market here is not as competitive as the
US or Europe, where you may have as many as six placement agents
pitching for high quality mandates. Asian GPs are still relatively young, too, so
they don’t tend to have long-standing relationships with placement agents.”
And the universe is certainly expanding. Fundraising for GPs focused on
emerging Asia reached a record high of 10 percent of global fundraising totals
in 2011, according to Emerging Markets Private Equity Association figures.
That’s up from about 6 percent in 2008.
But even with more opportunities for placement agents in the region, firms
with global reach will likely win most mandates. Fund sizes are creeping up
and so GPs are increasingly attempting to raise capital from outside the
region. They are also employing sound risk management techniques by
seeking to diversify their investment base.

2. Australia’s CHAMP Ventures had previously raised capital from mainly
domestic investors. Yet when it sought A$475 million (€405 million; $492
million) for its seventh fund, it knew it was going to need to look further afield.
It hired MVision to help with fundraising – the first time this well-established
firm had ever used a placement agent.
“We were looking for a firm with a global platform,” says CHAMP director,
Gareth Banks. “That was important to us because we were raising capital
internationally for the first time.”
CHAMP recently closed its fund with 25 percent of capital coming from Asian
investors, 20 percent from the US, 11 percent from Europe with the remainder
from domestic sources.
Indonesian fund Saratoga Capital also recently used a placement agent –
UBS – for the first time when it raised $600 million for its latest fund. “The
market conditions are now much tougher,” explains Kay Mock, one of the
firm’s founding partners.
“LPs have become more sophisticated and thorough in their due diligence and
the questions they ask are now more comprehensive. Unless you have
significant manpower as a GP, you can’t respond to these requests promptly.
We also decided to use a placement agent because we were raising a much
larger fund this time around.”
Clearly, placement firms have opportunities in Asia. But GPs in the region see
agents primarily as introducers rather than valued advisers, with the result
that success fees are far more prevalent than retainers, sources say.
“GPs tend to expect a placement agent simply to open doors,” says Conrad
Yan, partner in Campbell Lutyens’ Hong Kong office. “Yet we believe that is
only around 10 percent of the value we bring. Some players do just offer this
and will take on mandates on the basis that if they can make, say, five
introductions, they hope to secure one investor.”
The irony is that adding value is more important in Asia, where many GPs are
in relatively early stages of development, than in the US or Europe, where
advisory mandates are now more commonplace.
“GP needs in Asia are different from those in more developed markets,” says
Amundsson. “They often need help shaping their strategy, assistance with
their marketing message and communications. Often, these firms are run by a
strong founder, but the second or third tier of professionals is less commercial
and that can prove to be a weakness in due diligence. Placement agents
often need to train and prepare the wider team for fundraising.”
Mandates are also more challenging in some respects. Institutional placement
agents, which have long-standing relationships with LPs that they do not wish
to sour, have to be as sure as possible that the GPs they take on will be
tomorrow’s good performers.

3. In the US and Europe, firms are more typically raising fund five or six, while
Asia has opportunities to work with second-time funds, which present typical
“second fund” issues, Movsoumov says.
“They may only have one or two realisations and their strategy and team are
not fully tested. To some extent, you have to make a call on how the firm will
develop in the future.”
Despite the challenges, the long-term prospects for placement agents in Asia
are bright.
“There is a good quantity of investible funds, many of which are starting to
show very good returns and sustainable investment strategies,” says
Movsoumov.
“There will also be a new generation coming through and so the universe will
expand. That’s against a backdrop
of
continued
economic
growth
and
a
significant
increase
in
US
and
European
investor
interest
in
Asia.”