A S IA
GONE FISHING FOR ASIA’S ‘WHALE’ INVESTORS Large institutional investors in Japan and South Korea are increasing their overseas private equity exposure but the process has been slow. A booming private wealth market could be quicker
A
t some point this year, Singapore is expected to overtake Switzerland as the global centre of private wealth. Hong Kong is not far behind. Globally, Asia is set to see the largest rise in the number of ultra-high net worth individuals with growth of 39%, led by Indonesia and India, according to Knight Frank’s latest Wealth Report. In China, too, recently minted tech billionaires and real estate tycoons have been setting up family offices outside the country to safeguard their wealth. For more than 20 years, private banks from Europe and the US have been using feeder vehicles to steer
growing chunks of Asian wealth into private equity funds. HSBC’s private bank arm raised a record USD 3.2bn for alternative investments from its clients globally last year, a jump of nearly 40% from the previous year. Almost USD 2bn of this was from clients in Asia. More recently, fund managers have been expanding their relationships with pension funds and institutional investors in the region to concentrate on private wealth too and in October Apollo hired Edward Moon from HSBC as head of Asia Pacific for global wealth in Hong Kong. The key to unlocking these rising
private wealth allocations, according to Simon Jennings at HarbourVest, is a more liquid investment mechanism that caters to major changes in the clients’ personal circumstances. To tap into Asian’s pension funds – sitting on billions more in AUM due to shifting demographics and rising salaries in the region – there is another challenge: relationship management.
Lip service
It is generally estimated that around 25%-30% of a global private equity manager’s AUM should come from Asia, far behind North America and Europe.
Asia’s largest pension fund allocators Current asset size (USD m)
Country
Plan name
Plan type
Japan
Government Pension Investment Fund
Government de ned bene t 1,395,289 (DB)
South Korea
National Pension Fund (NPS)
Government DB
685,437
Japan
Corporate DB
Government DB
591,704
Malaysia KWSP (EPF)
Mandatory de ned contribution (DC)
199,751
Japan
Corporate DC
Corporate DC
130,504
South Korea
Corporate pensions
DB
121,801
Hong Kong
MPF schemes
Mandatory DC
111,254
Taiwan
Statutory corporate DC plans (LPA)
Mandatory DC
79,267
SSF bene t fund (old age and child Thailand allowance)
Government DB
69,443
India
National Pension System
Government DC
58,766
South Korea
Corporate pensions
DC
51,015
Government DC
13,985
Thailand Government pension fund Source: Mercer, 2021
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P R IVAT E E QU IT Y W IR E IN S IG H T R E P ORT
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