US private equity major Warburg Pincus sees sizeable opportunities in Southeast Asia, as it looks to replicate its success in markets such as China and India.
“Not everything can correlate between markets, but there is a bigger opportunity for a good portion of those investments in Southeast Asia,” Jeffrey Perlman, managing director and head of Southeast Asia at Warburg Pincus, told DealStreetAsia about how successful models in other Asian markets can be localised in Southeast Asia.
While several global private equity powerhouses are focused on more mature markets such as Japan, South Korea, or Australia, Perlman said that entrepreneurs in Southeast Asia “are most focused on what’s happening in China or India because they are much closer in their minds as to where the evolution of the market is going to be over the next five to seven years.”
In this region, the US-based firm has a strong interest in Vietnam, which is its third-largest investment location in Asia after China and India. Since 2013, Warburg Pincus has invested approximately $2 billion in Vietnamese companies.
DealStreetAsia had an exclusive interaction with both Perlman and Warburg Pincus CEO Chip Kaye during their recent visit to Hanoi where they met up with Vietnam’s prime minister.
Addressing the global downturn across markets, the executives are betting on their firm’s approach of building platforms over time and focusing on growth rather than momentum investing.
“These moments are complicated, they create uncertainty but they also create opportunity. And in some ways, environments like this are more well-suited to us than markets that are excessively momentum-centered,” Kaye said. “If you’re focused on building a real business, the markets may be more or less receptive at a moment in time, but you can simply wait until the markets are in a more constructive place,” he added.
Warburg Pincus closed its second China-Southeast Asia fund at $4.25 billion in 2019. Perlman said that the firm has been disciplined in deploying and did not rush to raise a new fund too soon. “We all should have our expectations on where valuations may go, but this is not a time to be doing nothing,” he observed.
Edited excerpts of the interview with Perlman and Kaye:-