Speaking at the AVCJ Private Equity & Venture Forum last week, Illinois Teachers Retirement System investment officer Kenyatta Matheny expressed his bullishness on Asian private equity. Recapped by Asian Investor:
Matheny is very positive on the region. “If you’re building a global private equity portfolio, you would be remiss to not earnestly look to having an allocation to Asia and, quite frankly, with China as the anchor,” he said.
The Illinois fund last month struck a partnership with Asia Alternatives, one of the biggest Asia-focused PE fund-of-funds managers with $3 billion in AUM. At the end of October it approved a $200 million commitment to the manager. This followed a period of 18 months to two years spent developing the relationship, Matheny noted.
Illinois Teachers had spent two or three years visiting the region to understand the landscape in the mid-2000s and subsequently made direct investments in PE funds and sought a local investment partner. It now has $5 billion of assets invested in private equity and another $3 billion of unfunded commitments, amounting to an $8 billion portfolio overseen by Matheny.
He was effusive about the benefits of the relationship with Asia Alternatives. “We think alike, we’re looking at the same managers, underwriting from the same perspective, but now you’ve got this piece that we don’t have: you can access small managers, you’ve helped fund a few start-ups” he said.
Matheny also spoke about an increased number of partnerships between U.S. and Asian private equity firms. From Asian Investor:
Kenyatta Matheny, who co-runs the PE portion of Illinois Teachers, has seen more cross-border partnering taking place between PE firms in Asia and the US, in both directions.
“This has been more recent, within the past 12 months, where there may be an Asia-specific PE fund with an asset that can continue to scale, but they’re looking to exit.” One route for them has been for an international PE firm taking on the asset and expanding it beyond China to other markets, such as Southeast Asia.
Matheny has also seen such deals originating outside Asia. “With an asset that has 5-10% exposure to China, we can pick up the phone and call counterparts in Asia. We’ve scaled the asset via acquisitions at home.”
The conference also featured a panel discussion on “Why Asia Still Matters for Private Equity.” The audio of the panel can be heard here.
Photo Credit: “Asia Globe NASA”. Licensed under Public domain via Wikimedia Commons