Interest from investors and family offices in private equity is expected to heighten in the next six to 12 months in the Asia Pacific, as the diversification of portfolios and pursuit of better returns are valued more under market turmoil, according to an executive of German fintech startup Moonfare.
Berlin-based Moonfare, which manages over €250 million, operates as an online platform that allows its over 5,000 active clients including family offices, bankers, chief executives and entrepreneurs, to access a curated range of private equity funds.
“This whole COVID situation will make high-net-worth individuals more sensitive but more willing to invest in private equity due to considerations of a diversified portfolio and outperformance it provides versus traditional asset classes,” said Mathieu Forcioli, head of Asia Pacific at Moonfare, in a recent phone interview with DealStreetAsia.
The company works like a limited partner (LP) to collect orders from investors registered on the Moonfare platform and to invest in private equity funds on their behalf, which effectively lowers the minimum ticket size of such funds to somewhere between $100,000 and $150,000 – well below the hundreds of millions of U.S. dollars large institutions usually place. Its offerings cover private equity buyout funds, growth equity funds, funds of secondaries, and most recently, venture capital funds.
“I think the risk appetite in Asia, at least for countries like China, Singapore, Indonesia and so on, is clearly higher than in Europe. It means that the interest in the asset class [of private equity] is also higher. People are prepared to take more risks to get higher returns, which means the prospect for our business in the region is also very exciting,” said Forcioli.
The firm operates in Europe and Asia across countries including the UK, Germany, Switzerland, Luxembourg, and Hong Kong. It entered the Asian market in January 2020 by registering an entity in Hong Kong and is expected to open another office in Singapore in the next 12 months, targeting to cover major markets including China, Singapore, Indonesia, Thailand, Malaysia, and the Philippines.
Moonfare’s Asian journey comes as the world’s very high-net-worth (VHNW) population (those with a net worth of $5 million to $30 million) increased by over 10 per cent to 2.7 million individuals in 2019, a sharp acceleration in growth from just 1 per cent in 2018, according to a Wealth-X report in February 2020. Their combined net worth of VHNW individuals grew by more than 10 per cent to reach $26.6 trillion last year.
The report shows that the financial wealth of VHNW individuals in China and Japan accounted for the largest pie in Asia at over 60 per cent in 2019, while the US topped the global ranking with a proportion of about 36 per cent.
Tapping into this growing capital pool in a post-virus world, Forcioli foresees more people to “embrace” private equity to diversify their portfolios.
The startup raised 25 million euros ($28 million) in a funding round in April 2019. Its investors include ProSiebenSat.1 Media SE’s former CEO Thomas Ebeling, former KKR & Co. partner Henrik Kraft, and ex-BC Partners Chairman Jens Reidel. Before Moonfare, Forcioli served as head of Private Markets for UBS Wealth Management in Asia.
Forcioli spoke to DealStreetAsia about Moonfare’s business model, major plans in 2020, his observation on current investment sentiments, as well as market competition and outlook. Below are the edited excerpts: