Has Asia’s safe haven been oversold?
In a region where private-equity flows are rapidly drying up, many investors regard Korea as a relatively lucrative safe haven. But even in Korea it’s an arduous task putting deals together and successful exits have been few and far between.
The investments in Asia haven't been a roaring success concedes a private-equity dealmaker who has been made redundant. He has no idea when or where he will make or lose his next million. "Most private-equity funds have struggled to make exits and get their cash out, so why should we be given more money?" he asks resignedly.
Institutional investors have been thinking along exactly the same lines, prompting a dramatic shrinking of the Asian private-equity market. In the first half of 2002 only $544 million was raised - compared with $3.9 billion in the same period last year. The amount invested fell by 33% to $5.14 billion.
Rumours now swirl around Hong Kong and private-equity outposts scattered elsewhere in the region about which firms will follow Deutsche Capital Partners, ABN Amro Capital, Belgian fund FLV and countless other smaller outfits that have fled the market.
"People buy the long-term view that Asia will grow," says the unemployed dealmaker. "But as a wise sage said to me over dinner: 'You have to remember that we have been giving money to Asia for 200 years. And that's 200 years of getting shafted.'"