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Motoring along
Swiss alternative assets manager Partners Group, one of the first
global funds of funds managers to set up shop in the Asian region,
has also been among the most dynamic. Siddharth Poddar reports
on the firms progress.
For a firm that set up its first office in Asia
in 2004, Partners Group has come a long
way since. Having launched its Singapore
office four years ago, the alternative assets
manager has expanded its Asian presence
by establishing three further offices in the
region in just the last 10 months. Thats
impressive progress by any yardstick.
The Asian drive has been spearheaded
by Philipp Gysler, head of Asia, and
Christoph Rubeli, head of markets Asia.
The two work in tandem on opportunities
in the region. While Gysler focuses more
on the investment side of the business,
Rubeli is dedicated to business development and new ideas and initiatives.
However, Rubeli points out that their
roles and responsibilities are not mutually
exclusive. For example, Gysler is occasionally involved in fundraising efforts while
Rubeli gets involved in investments from
time to time. Its not black and white, he
says.
Rubeli shuttles back and forth between
the headquarters in Zug and Singapore,
while Gysler, who helped build Partners
presence in the US when the firm established operations there, will be based
permanently in Singapore from late June
onwards.
He is technically the overall head of the
Asian effort, says Rubeli of Gysler.
Partners Group managed approximately
CHF24 billion ($23 billion) in assets as of
31 December 2007, of which private
equity assets made up CHF16.7 billion, or
about 70 percent. The firm has more than
250 partnership investments in more than
150 GPs. In addition to its four Asian
offices, it has six others around the world.
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THE FIRST WAVE

At the turn of the decade, many investors
around the world were still contemplating
whether or not to buy into the Asian
growth story. Some were sceptical about
the rapid expansion of Asian economies
given that the Asian financial crisis of
1997 was an event from the not-toodistant past. For many, the ramifications of
the crisis were considered still too
profound to allow them to consign all
thought of it to the past.
What was it that convinced Partners
Group, one of the earlier funds of funds
arrivals, to venture into Asia four years
ago? Rubeli says that by 2003, it had
become apparent that things in Asia had
changed and, as compared to the 90s,
many of the reasons that prevented us
from being active in Asia had actually
changed.
Rubeli refers to the ingredients of a
potentially attractive private equity
market that were already in place - aspects
that were changing for the better, and the
promise of the future.
There were certain economic trends
that had been prevalent for a while, Rubeli
says. He talks of an excellent top-down
picture with very solid growth, and the
rapidly growing local consumption in the
region. While growth was characterised by
cheaper manufacturing costs and exports,
there was also rising demand within Asia
that was building up.
Partners Group saw the maturing of the
Asian private equity industry by 2003.
There was a new development, or a new
phase of private equity and venture

capital, which evolved around Asia which

we actually believed in performance terms
looked much better than anything we
could see around the globe, says Rubeli.
Prior to 2003, he says, private equity fund
managers in the region were very young,
somewhat inexperienced or were probably just pursuing themes that were not
that relevant to the market anymore.
But the projected growth of the Asian
private equity market was difficult to
ignore. The firm estimates that Asian
private equity will account for about a
third of the industrys size globally in a
few years time. We estimate that around
2012-2014, the Asian time zone will
represent about a third of the funds raised
and about a third of the deals done around
the globe, says Rubeli. Such growth
would put it at par with the US and
Europe in terms of size and importance.
Rubeli says that it is certainly a development you cannot ignore and one that we
as a global firm wanted to take very seriously and be one of the early adopters of
the trend.
The firm had sufficient conviction to set
up programmes for Asia Pacific and made
the decision to expand systematically into
the Asian time zone.
WAVE NUMBER TWO
Since last year, the firm has begun establishing more of a local presence and has
opened up offices in three new locations
in the region. This stems from the belief
that many of the markets in the region
have evolved and are now sufficiently
special to warrant their own effort.
The growth and development of private
equity markets in countries such as China
has led Partners Group to decentralise its
operations. Rubeli says that in China there

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is so much happening that its difficult to

keep track of the market and follow it on a
daily basis. The market in itself is huge
and there are big distances even within
China that you have to manage, and we
felt that Singapore is no longer the ideal
location to do this from.
Among the primary reasons for the
decentralisation drive was the desire to be
close to fund managers and be an active
counterparty in whatever they were
doing. The firm also wanted to be in the
heart of where a growing number of
limited partners are based. The available
pools of capital in Japan and increasingly
Australia, owing to its rapidly growing
superannuation funds with their demand
to access more products, are an attractive
proposition for the firm. It wants to
essentially follow those clients more regularly in their own market and customise
and adapt our service offerings.
Rubeli sees further growth ahead. There
are many new markets that are developing
beside the traditionally major players such
as Singapore, Hong Kong, Japan and
Australia. There have been developments,
for example, in Southeast Asia in countries
such as Thailand and others where institutions are considering in earnest to start
alternative investment programmes.
Similar developments are taking place in
Taiwan and Korea, he says.
The firms expansion began taking form
with the establishing of an office in Tokyo
in September last year. It was soon
followed by the setting up of a Sydney
office in April this year, and its most recent
office in Beijing in May.

Rubeli: Asian growth trends impossible to ignore

We estimate that around

2012-2014, the Asian time
zone will represent about a
third of the funds raised and
about a third of the deals
done around the globe.

GROWING, ADDING
The firm currently has a team of about 20
on the ground in Asia, a number which
Rubeli says will grow rapidly towards the
end of the year. It is currently making
additions to its team and has hired a
number of staff in its Swiss office and elsewhere who are currently being trained to
work across the Asian region.
Singapores role, in this decentralised

and somewhat altered context, will not

change much, but it will be enhanced,
Rubeli says. It will remain a hub for the
firms investments and is likely to evolve
into more of an operational hub as well.
The firm decided that some of the operational tasks and some of the back-up
systems will be managed or co-managed
out of the Singapore office, and in the
process, there will be more people in

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Singapore helping the firm with its infrastructure.

Partners is also considering adding other
business lines which have until recently
been less relevant to Asia, such as the
mezzanine practice. In Rubelis view, the
mezzanine space in the region is seeing
significant development and there is a
distinct possibility that the firm will have
dedicated staff pursuing the mezzanine
business in Asia.
The firm is also increasingly investing in
real estate and infrastructure in Asia,
which will also add to the size of its team.
It has already grown its real estate team
and recently shifted three people from its
San Francisco office to Singapore.
Flexibility seems to be the buzzword of
the firm. It claims a willingness to increase
or decrease the scale of its operations in
any particular region or segment of the
asset class without conforming to a rigid
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If there are other markets

which are showing the
characteristics of an Australia,
a China, or a Japan, then
we might consider that.

Gysler: setting down roots in Singapore

blueprint. A number of people on its team

work on deals from across regions and of
various types. Although there are a
number of specialists in each of the
domains to make sure that the technical
discipline is added where it is needed
thats a small nucleus of people. The
remainder are more generalist, but know
the landscape well and have local relationships.
Were less organised into little boxes,
where you have an infrastructure
Southeast Asia person and an infrastructure Northeast Asia person that go to an
Asia person, and that links into the globe.
We dont quite manage it that way.
THE ASIAN PORTFOLIO
Partners Groups portfolio of Asian private
equity investments has been rising rapidly
over the last four years. Rubeli says the
firms allocations to Asia have grown in
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line with that of the Asian private equity

market. On the private equity side, the
firm presently has relationships with
about 25 funds in Asia, a number that is
likely to increase. Investments in the
region have become a very solid component in terms of its clients portfolios.
He says the performance of investments
in the region has been very good and adds
that he does not have one fund relationship in this region that we would not
continue with.
The group will be adding about 10 to 15
more funds to its new investment
programme. He remains bullish on Asia
and says that there is a lot of new talent
that we might be able to back.
About half of the firms private equity
funds are flowing into India and China,
but other building blocks of client portfolios are Australia, Japan and Korea. Most
of our clients prefer a balanced offering
that includes some of the mature

economies of Asia, where you indirectly

benefit from the rapid growth of India and
China, and some direct exposures to these
time zones, he says.
When queried about the firms next
potential location for an Asian office,
Rubeli says that the firm will probably
maintain four offices in the Asia Pacific
region for the time being, and its a bit
premature to discuss further extensions:
But if there are other markets which are
showing the characteristics of an Australia,
a China, or a Japan, then we might
consider that. We have discussed India - we
felt it was a little bit premature but might
happen over time.
When asked why Beijing was preferred
as the China base over Shanghai or Hong
Kong, Rubeli acknowledges that, from an
investment perspective, it could have been
any of the three cities. In each of the locations we have a similar number of fund
relationships. Expansion capital is more
Shanghai-based, buyouts and more mature
companies are more Beijing-based, and the
large-cap is more Hong Kong-based.
However, the decision makers, the
regulators, and a lot of the policy-makers
are sitting in Beijing. We also wanted to
show them that we are not like any other
Western firm going to where its most
convenient and we wanted therefore to
open in Beijing to be close to those policymakers and regulators as well as the potential LPs and to go from Beijing across the
country in a very Chinese fashion, which
is probably done best from Beijing.
Whether destination number five will
be Mumbai or Hanoi is anybodys guess,
but you can be rest assured that, whatever
the choice, Partners Group will have good
reason for making it. n

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