In this episode of China Money Podcast, guest Piau-Voon Wang, partner and head of Asian investments at Adams Street Partners, discussed the investment strategies of Adams Street, a global private equity firm overseeing more than US$20 billion, and the precious lessons he has learned from investing in Asia and China for over a decade.
Listen to the full interview in the audio podcast, or read an excerpt.
Q: Adams Street Partners has a long history in fund-of-funds investing. Previously on China Money Network, we had guests from two other fund-of-funds in the region: Pantheon and Squadron Capital. What are some differences between you and those two peers, particularly in your activities in Asia?
A: Yes, we trace our history back to 1972 when we first invested in private equity, initially in North America. Then we expanded into Europe in the 1990s, and in Asia during the past 12 years.
Our main differentiating factor with our peers is our research-oriented approach to the market and a focus on portfolio construction. For example, we believe diversification is the main form of risk management in private equity. Hence, we have a very diligent diversification policy on funding investment across time, subclass, and geography. We often commit the same amount to funds regardless of their fund size, to achieve the required level of diversification. This is unique.
We also employ the same global standard in how we choose a fund to back. So in a sense, we are trying to find and invest in the best private equity funds anywhere in the world.
Q: You were born in Malaysia, went to Nanyang Technological University (NTU), and you have been with Adams Street since 1999. How did you initially get to know and later join Adams Street?
A: I was trained as an accountant at NTU, and started my career at Arthur Andersen in the early 1990s. I went on to become a mutual fund manager from 1994 to around 1996. I wanted to go to the venture capital side after being disillusioned by some of the practices in the fund management industry. So I became an aspiring venture capitalist in Southeast Asia between 1996 to 1999, also made some pre-IPO investments in Greater China region during that time.
That was an interesting time in Asia. We were investing into a red-hot market. Then came the Asian financial crisis, and Nikko Capital did not survive the crash. It was at this time that Brinson Partners, the predecessor of Adams Street, approached me to do research work on Asia.
I was surprised, because in 1998, Asia was no longer an emerging market, but a "submerging market" with huge capital flight out of the region. Private equity in Asia, as an industry, was effectively wiped out. As an organization, Adams Street Partners first looked at Asia around 1992 to 1993 when the market was very hot. The firm decided to pass the opportunity, and revisited the idea at the depth of the Asian Financial Crisis with me relocating to London to conduct research on Asia.
So I think Adams Street showed a lot of foresight and conviction with their timing to get into Asia. We took our time by meeting GPs regularly in the region for four years without making any commitment, getting to know them well, and made our first investment in Asia in 2003.
Q: You are the perfect candidate for the job, because aside from English, you speak Malaysian, Mandarin, Cantonese, and another dialect spoken in southern China and Taiwan?
A: Actually, it's not unusual for Malaysian Chinese to speak a few dialects because it is an immigrant community. I like to say we are fluent in all of them, but good in none of them.
Q: That's very modest. Back to Adams Street, you opened its Singapore office in 2006, and an office in Beijing in 2011. Just five years apart, but the world has gone from the peak of the bull market to post-crisis. How were your investment activities impacted throughout this cycle?
A: We took a really measured approach to the Asian market.
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