Private equity in Asia growing

Ramani KANGARAARACHCHI

People from Asian countries who moved to United States seeking business opportunities are now looking at South East Asia. Economies have eroded and bankruptcy has arisen turning investors away from traditional leveraged investment instruments following the financial wreckage, CIMA Lanka Chairman Sutheash Balasubramaniam said.

S. Balasubramaniam

Speaking at the CIMA CEO Forum, on private equity: an unused option, Balasubramaniam said some people believe private equity and derivatives were the vultures of the financial wreckage. "But one would argue that it is also a saviour as indicated by some of the recent trends of private equity in growth markets."

However, capital is the key component factor of production and given the activism of Indian investors and the inflow of focusing direct investment to China, one could conclude that private equity in Asia is not dead, he said.

He said a recent survey conducted by Emerging Markets Equity Association said that private equity commitment will continue to grow in emerging markets by at least 15 percent in the next two years and countries that are in the horizon are most attractive, not only China and India but also Brazil.

As per the survey 67 per cent of private equity investment is expected to be in work markets. Sri Lanka which is driven mainly by SME sector is set to be funded more by debt than equity.

Despite the global financial crisis, institutional investors have shown greater appetite to developing markets according to Asia private equity review of June 2010.

Balasubramaniam said opportunities opened Sri Lanka to a completely different business equilibrium.

Capital will be wrecked for the economic recovery and there is that much the State can fund towards this cause, compelling the private sector to take a lead role.

KFH Asset Management Malaysia Executive Director Lew OonYew was the guest speaker at the event followed by a panel discussion with Chemanex, CEO Preethi Jayawardena, IMF Resident Representative Koshy Mathai, HNB Chairman Rienzie Wijetilleke and Ram Rating Lanka CEO Adrian Perera.