bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Venture capital firm Warburg Pincus is to invest a large portion of its new US$2.5 billion private equity fund in demand-driven firms in Asia, and is skirting the United States market.

The Warburg Pincus International Partners (WPIP) fund emerged from what its managers saw as a need to match a growing deal-flow in Asia and Europe which had been stifled by the original Warburg Pincus Equity Partners fund requirement that no more than 25 to 30 per cent be invested outside the United States.

Warburg Pincus is one of the first equity firms committed to investing in Asian markets and WPIP is the largest fund of its kind, according to Venture Economics.

The fund has been prepared for investment in demand-driven firms at all stages of development, particularly in core areas of information technology, health, telecommunications, financial services and energy. Only about 5 per cent of the firm's holdings are in traditional Internet companies.

'We try not to play the Internet bubble,' said Chang Sun, managing director for Asia.

'We invest in companies that could exist outside of the Internet world.'

Mr Sun believes the vast majority of Internet firms that are plummeting in global markets are solely supply-driven, without substance behind them.

'Many of those supply-driven firms deserve to die. Instead, we want to invest in companies that are demand-driven and would serve a market need, even if they weren't online,' Mr Sun said.

The fund's managers say their investments in the United States can plug capital into an existing management structure but in China they find they have to build a new system around the company.

However, despite the considerable risks many claim exist in the mainland market, the fund's managers say they have no remorse about the deals they have made.

'If you wait until the market is perfect, you've lost your opportunity,' the fund's senior managing director Bowman Cutter said.

'There need to be risks in order for a high return potential.'

Mr Cutter was deputy assistant for economic policy on the National Economic Council during US President Bill Clinton's first term in office and the executive associate director of budget during the administration of former president Jimmy Carter.

'We are most bullish with our investments in information technology and telecommunications,' Mr Cutter said.

'But what we invest in are people, not in assets. So what we really try to do is follow the best and brightest entrepreneurs for the largest value added.'

Between 35 and 40 per cent of the new fund is invested in Asia, 55 to 60 per cent in Europe and the remainder in Latin America.



Warburg Pincus eyes demand-driven firms