Waking up some tigers: Is Asia the new frontier for private equity?

Investors are looking east, where spending power is rising, global brands are relocating, and labor is relatively affordable. The Asia-Pacific region is luring alternative investments, specifically, private equity, in an environment of willing consumption.

7-tips-for-avoiding-legal-landmines-when-doing-business-in-asia
                                                   Image source: businessinsider.com

Fund managers and investment groups took note of the upswing in profits last year in Asia. Certain industries, such as education, wines and spirits, and cultural goods have shown themselves ripe for picking. Meanwhile, retail is slightly nipping at investor confidence in Asian countries known for business inefficiencies.

So-called “frontier territories” such as Vietnam, Myanmar, and other emerging markets are also attracting funds, albeit with some modernizing exigencies. There are notable cases of underperforming businesses and companies that have been turned around by the infusion of private equity. Sectors that have most benefited from the boom are media, technology, and telecom. Asia-grown stellar technology startups such as Alibaba, Baidu, and Grab are also galvanizing interest in the region.

Meanwhile, the strongest evidence for the region’s attractiveness to private equity is the entry of four of the largest private equity funds in the global market. These Asian funds from elite financial institutions in China, Japan, and Singapore have a target size of at least $100 billion.

Given these realities, Asia has displaced Europe as a haven for private equity investment, although investment experts warn that such growth might be cyclical, as has been observed in the past.

maxresdefault
                                                             Image source: youtube.com

Gregory Lindae is an expert in venture capital and private equity markets. He has also worked with some of the most prestigious financial companies in the industry such as BlackRock, Salomon Brothers, and FMO. For more reads on the investment industry, visit this blog.

What is green investing?

Green investing is an increasingly popular philosophy that promotes investment toward environment-friendly companies or initiatives. Two investors might define a green company differently, but this mostly includes companies engaged in solving environmental problems (such as the development of renewable energy) or conducting business in an ecologically conscious way.

solar-2376233_1280
                                                             Image source: Pixabay.com

This type of investing is deemed an offshoot of socially conscious investing, although neither of them implies investments that are safer than a market index such as the S&P 500. Investing in “green” firms can actually be riskier than other equity strategies, as many entities in this landscape are in the development phase, with low revenues and high earnings valuations. Still, if investors consider environmental protection via encouraging these eco-friendly businesses, then green investing can remain attractive and feasible.

Some options for building a green portfolio include the following:

Securities

Individual stocks allow investors to funnel their dollars to a number of companies that meet their “green” criteria.

Mutual funds and exchange-traded funds (EFTs)

This is investing in a pool of securities to offer average investors an affordable method for diversifying across multiple sectors.

Bonds

A fairly new part of green investing, green bonds produce funds for environmentally friendly ventures. This fixed-income vehicle, when offered by governments to fund green programs, may provide tax-exempt income.

pinwheel-2222471_1280
                                                      Image source: Pixabay.com 

Gregory Lindae is a veteran in the investment industry with over 20 years in service and has worked with companies such as Blackrock, Salomon Brothers, and FMO. Learn more about green investing this blog.

Private Equity and Venture Capital: What’s the difference?

The common source of confusion between a private equity and venture capital is that they both refer to firms that invest in companies and exit by eventually selling their investments via equity financing. But all the funding similarity ends in this general, canopy aspect.

Business concept, Businessman confuses between two choices of money.
                                             Image source: mergersandinquisitions.com

These two business endeavors invest varying amounts of money, claim different percentages of equity, and deal with different sets of companies, distinguished by type and size. Venture capital firms mostly put their money in startups with high-growth potential.

Most venture capital firms spend $10 million or less in companies and would spread out their investments among various startups. This way, if one fails, the entire capital is not affected. Unlike private equities, venture capitalists deal only with equity, investing only in 50% or less of these.

Private equity firms, on the other hand, use both cash and debt in their investment, and mainly get involved in established, mature companies that are not earning. While private equities can buy companies from any sector or industry, they prefer to focus on a single company, buy 100% ownership, and work on the operations to make it grow anew and generate revenue.

shutterstock_270586106-780x420
                                                               Image source: acceleratesme.com

A go-to expert in the investment industry, Gregory Lindae has built an impressive track record and influence in venture capital and private equity markets. He has worked with prestigious companies like BlackRock, Salomon Brothers, and FMO. For more on his work, drop by this website.

Some Principles In Venture Capitalism

Venture capitalists, at least those who are able to stay in the course, are a rare breed. More than the money, it takes a lot of guts to engage in such a commitment. Here are a number of principles that are close to any venture capitalist’s heart.

Venture capitalism would entail a strong faith in the future. The reason venture capitalists seem to come up with the brightest ideas is that they are the exception rather than the rule. Most of the time, they think very differently from the rest of the lot, even being labeled as ridiculous. And yet, they succeed. This is because of their strong faith in the future of their project.

Image source: panamericanworld.com

Another key principle that is natural to venture capitalists is a strong understanding of how technology works. The success of any venture always has to do with a good grasp of how technology lessens the work, and how well it is able to speed things up. This is all within the aim of letting the market know how much it makes sense for the company’s product to be included in their lives.

Venture capitalism would also entail taking a lot of risks. However, this is not the type of risk taking typical of profuse gamblers. These are all calculated. A venture capitalist should be rather cerebral when it comes to calculating risks, such that he is prepared with a number of concrete steps ahead of any conceivable scenario.

Image source: thepurposeisprofit.com

It may sound that such principles make success a rarity in the business. The truth is, success in here is indeed a rarity, and no one else knows this better than real venture capitalists themselves.

Gregory Lindae is an investment industry expert focusing on venture capital and private equity markets. He has worked with prestigious financial firms and is now currently working for The Dutch Entrepreneurial Development Bank in The Hague, Netherlands. For more on the industry, visit this website.

The Advantages Of Private Equity Investment

Private equity is an alternative investment instrument that gained popularity in the 1980s, when the private equity sub-industry leveraged buyouts entered public awareness due to numerous high-profile transactions. Since then, individuals and institutions realized that private equity is a profitable investment option.

There are numerous reasons for investing in private equity assets, such as the following:

 

PE+coins
Image source: investx.com

Diversified portfolio

Most financial advisors recommend diversifying portfolio, as it can minimize risks, maximize returns, and protect the portfolio from volatility. Private equity, when researched and analyzed intently, can balance the portfolio.

Plenty of opportunities

Of the millions of companies all over the world, less than one percent of them are listed on public exchanges. Instead of restricting investment activities on the limited number of public companies, investors can gain access to a large collection of potential investments by selecting private equity.

Participation in companies

Stockholders in public companies typically play take passive roles in management. It is different in private equity investments. Most of the time, private equity managers, who have extensive experience in the industry, want to actively participate in some of the management and operations tasks of the companies they invest in.

101419798-small
Image source: freeborn.com

Long-term outlook

For those looking to gain quick profits, private equity is not the right option, because investments in this asset class experience returns after a few years and private equity firms generally wait for the right opportunity before investing in a company.

Gregory Lindae is a veteran in the investment industry with his over two decades of experience in venture capital and private equity markets. For more investment insights, subscribe to this blog .