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Mr. Shangkong
PUBLISHED : Monday, 19 November, 2012, 12:00am
UPDATED : Monday, 19 November, 2012, 9:53am

Storytellers pile into private equity as industry mushrooms

Over the past few years, the mainland's private equity sector has grown at a breakneck speed, attracting bankers and those who can sell a vision

BIO

George Chen is the Financial Editor and Mr. Shangkong Columnist at the South China Morning Post. George has covered China's political and economic changes since 2002. George is the author of two books -- This is Hong Kong I Know (2014) and Foreign Banks in China (2011). George has been named a 2014 Yale World Fellow. More about George: www.mrshangkong.com
 

What skills and experience does a person need to become a private equity professional?

Compared with traditional financial businesses such as banking and insurance, private equity has a very brief history in China. However, many financial professionals feel the private equity industry on the mainland has already become very crowded within just a few years.

The past week was a significant one for Chinese politics - with the once-in-a-decade unveiling of a new leadership - and for Asia's private equity industry as well.

Top bosses from big firms such as KKR and Blackstone were in Hong Kong for the AVCJ Forum, one of the most important annual meetings for major global private equity players which want to expand their business in Asia.

I began to cover the private equity industry for my previous employer, a British news agency, in 2008 when the business was not as influential and crowded as it is these days. I remember when I tried to explain to some of my friends my job as a reporter on private equity - more often known as PE in the industry - in the region, and some of them were bemused and even amused. "PE? Physical exercise?" one of them joked.

How time flies. Just four years later, PE now simply means money to most people, and the media loves to write about PE people. Many of them are considered rising stars and new powers in the country's financial community.

I remember a PE industry executive once joked he felt the "private" equity business on the mainland looked more like a "public" business, because there were suddenly so many new players who were eager to talk publicly about their ideas and visions for the private equity business in the country.

People in PE come from diverse career backgrounds. The most common is perhaps banking. Following the 2008 global financial crisis that originated on Wall Street, many high-flying investment bankers from around the world decided to quit their jobs to start their own PE investment firms. Many of them were sick of office politics and the instability of banking jobs, so they believed it was time to be their own bosses. Many sales and marketing people also have the potential to become PE professionals, because they are good storytellers.

I asked a banker turned partner of a PE firm what kind of people he would want to bring into the business. His answer was simple: whoever can contribute good ideas and turn those good ideas into good investments. If you believe you can turn a good idea into a good investment, the rest of the work, such as financial due diligence and legal advice on contracts, is relatively easy. You can just hire a bunch of auditors and lawyers to help you get the work done.

Meanwhile, talking about good storytellers, don't you think journalists qualify as such? I hear that a former reporter at the Wall Street Journal in Hong Kong is ready to launch his own PE fund house after he finished an MBA programme in the United States, where I believe he made some good connections and found financial backers.

I wonder whether some of my journalist friends will find this an attractive career path.

 

George Chen is the Post's financial services editor. Mr. Shangkong appears every Monday in the print version of the SCMP. Like it? Visit facebook.com/mrshangkong

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