Wu issues warning as US funds target unlisted firms
Managers of some of the largest public funds in the United States have pledged billions of US dollars in unspecified direct investments in unlisted vehicles in the region.
Hong Kong businessmen warned, however, that the fund managers first needed to overcome cultural barriers and understand the ways of deal-making in Asia.
They said this was particularly true for direct investments, an area where there were no clear procedures to follow, and investors needed to spend more on due diligence.
Hopewell Holdings managing director Gordon Wu advised the fund managers to place more trust in the businessmen they were dealing with when investing in unlisted vehicles, rather than spending a fortune on expensive lawyers and consultants to fine-tune the contracts.
'As an operator of projects, if somebody calls up to invest US$15 million or $20 million, I would say fine,' Mr Wu said. 'I don't want to spend US$1.5 million [in lawyers' fees] to entertain your $15 million or $20 million.' Mr Wu suggested the best avenue for the fund managers was to invest more in publicly listed companies, an arena where the rules are clearer.
The fund managers appeared undaunted.
Charles Valdes, chairman of the investment committee of the $105 billion California Public Employees Retirement System (Calpers), said he expected direct investment to grow dramatically in Asia.
The largest public pension fund in the US, Calpers planned to invest $10 billion in private equity investments in the Pacific Rim in the next 10 years, Matt Fong, the California state treasurer and a member of Calpers' board of administration, said.
Last month, Calpers said it would make $225 million in direct investments in the Pacific Rim with the Asian Development Bank.
Patricia Small, treasurer of the $34 billion University of California pension fund, expected to increase the proportion of direct investments in its fund from 3 per cent to 10 per cent in the future. David Kim, commissioner of the $8 billion Los Angeles Fire and Police Pension System, said his fund had set aside $300 million for direct investment.
