As private equity firms continue to move to Singapore, KKR and General Atlantic opened offices last year, we speak to Luke Pais, Asean private equity leader at Ernst & Young, about the industry and the careers it’s creating.
In the global landscape of private equity, Singapore is seen as a location of substance, where there’s a proper regulatory framework in place and high-quality enforcement of regulations. Singapore is the capital hub for Southeast Asia, where wealth is concentrated and companies make regional decisions. And fund managers like to relocate here not only for business reasons but also because it’s a nice place to live. As more funds focus on Southeast Asia, fund managers with regional experience are increasingly in demand. The industry has become far more exciting over the last 10 years as Singapore has attracted a diverse range of capital that has resulted in a competitive market, more interesting deals, better opportunities for people and greater benefit to the investee companies.
In a typical PE fund set-up, a 10 person-strong headcount is considered large, but job opportunities will continue to grow, fuelled by an ever broadening base of deal activity and greater market penetration by PEs. Businesses increasingly realise that a partnership with a PE firm can bring real value. On the other hand, family-owned businesses sometimes use PE as an exit or retirement strategy, or conglomerates use it to offload non-core operations.
In today's world, where capital moves quickly across sectors and geographies, PE is considered a more stable and long-term source of capital. A typical PE fund holds an investment for three to five years during which it actively works to improve all aspects of the business. Therefore, a PE career can be stable and rewarding. PE executives also participate in the value they create through "carry" and some funds also have a policy where the executives doing the deal are given the opportunity to personally invest alongside the fund.
Long investment cycles mean they can't always source from other PE funds, so some jobs in 2013 will be filled by candidates from industry, investment banks, accounting firms and even law firms. Revenue-related PE roles, for example, are suited to senior advisory bankers, consultants or industry professionals. Big Four candidates with transactions exposure are considered when due-diligence, financial-analysis and model-building skills are a priority, especially at analyst level.
Indonesia is certainly considered ‘hot’ because of its demographics and economic growth – global and regional funds have been looking into it. It’s active, but it has to be seen in context: as far as closed deals are concerned, Singapore is way ahead. Many Indonesian companies just aren’t ready for PE investment yet. But having Indonesia investment experience certainly makes one's resume more sought after as a number of funds are looking to add Indonesian expertise.
As the sector matures in Singapore, some established funds have now gone through one or two investment cycles, leaving senior PE professionals with new career options. While some people set up their own funds or stay on to clinch a partnership, others may exit the industry after a few years. In a typical fund, you look at 100 opportunities for every one investment, which gives you exposure to C-level leaders across different sectors. After interacting with thousands of businesses, some people have a shot at setting up their own company from scratch. Family conglomerates also hire people with PE expertise.