As 2019 wraps up, the year holds several lessons for the private capital markets.
Notably, WeWork’s failure to launch and downward spiral, after tens of billions of dollars in investment, has likely set investors on edge at a time when several industry players are already expecting tougher fundraising conditions in the year ahead.
“Investors will be more cautious about high-growth companies with a high burn rate and without reasonable unit economics,” Yar-Ping Soo, Partner, Primary Investments team, Adams Street Partners, told DealStreetAsia, in an interaction.
While the latest Coller Capital Global Private Equity Barometer said majority of Asia-Pacific and North American limited partners saw Asia’s emerging private equity markets as offering the most attractive investment opportunities, Yar-Ping highlighted that southeast Asia had seen renewed interest from LPs, especially for the early stage/VC opportunities.
“We are selective in our exposure to the region given the depth and breadth of the market and the number of qualified managers. However, we see an increase in the number of capable managers and also an improvement in firms’ capabilities and track records. We are also seeing country-specific managers emerging, which is an encouraging trend,” she added.
Earlier this year, the Chicago-based investment management firm has closed its Global Secondary Fund 6 with about $1.05 billion in capital commitments. Prior to that, Adams Street Partners had also raised over $1 billion for its maiden private credit program.
Amidst competition and record-high levels of dry powder, Yar-Ping said there were “still opportunities to outperform the general Asia PE market.”
“We prefer early-stage managers in the venture and smaller funds in growth/buyout. They offer a better risk/return profile and have more up-sell opportunities. We are actively scouting for spinouts and new managers, as they could generate break-out returns. We like managers with specialization and differentiation, including differentiated sourcing, domain expertise, operational capabilities, and the ability to drive exits and liquidity.”
Edited excerpts of her views on the trends and shifts in the investment landscape in Asia.