Private equity is growing for a reset, experts say

Private equity markets can go for a shake-up, many fund managers are facing difficulties in raising cash, Serena Tan, CEO of Gaia Investment Partners, CEO of Malaysian Fund of Fund, told CNBC in Kanavarez Live in Singapore.

According to Tan, the atmosphere of low interest rate post-covid means that the market of deals was booming, increasing the track records of the fund managers. But many of these earlier successful private equity players are struggling to raise funds in the current shortage market, Tan said.

“We see that this is the market, in fact there is a good reset for a lot of private equity. For private equity in general, he said.

“There is a quotation that came out to say that many private equity players have raised their final funds, they have not yet felt, right?”

Investors are also becoming more intelligent, where they allocate capital, he said, which he has described as investment, chasing it “actually the top quarter”.

“You need to beat your private markets your public markets … because otherwise, why do you exist?” Tan said in a conversation with CNBC’s David Faber.

Tan said that in a way the fund managers are facing the demands of private equity space. For example, he said that many are now “focusing additional focus on having their operating teams”, which involves establishing the right governance structure and hiring the right talent to ensure that the funds are able to increase their revenue and optimize the cost from the beginning.

Moving forward, Tan is expecting a “boom” in investment by sovereign wealth funds in Asia, given that the choice of GIC and Temasek of Singapore is increasing their teams.

Tan said, “There is a dissemination that is going to come out, starting, obviously, in places like Singapore, Hong Kong, but actually in the area around Southeast Asia,” Tan said.

In Japan and South Korea, Scott Han, a private equity investment group located in South Korea, Han & Company’s CEO, looks at opportunities, given the high levels of domestic liquidity in the markets.

“If you look at the higher value markets in Japan and Korea, you are looking at the opportunity to make multi-aura dollar transactions with ownership and change opportunities on high single digits,” Han said.

He said, “We can acquire, where, in fact, whatever benefits we want about 5% – it is very attractive,” he said, compared to the market from the US and its high cost of capital.

“Business here, you have the opportunity to get more unknown returns, because … these capital markets are not as efficient, and competition for deals is not at the levels you will see, I think, in America,”