“Public equity markets in most major Asian economies will trade at substantially lower levels at the end of 2008 than the levels they were at in September 2007. This will be reflected in the pace of deal completions and exits for private equity.
Some of the larger buyouts completed in Asia in the last 18 months that were won at auctions at high multiples and which pushed the limits on financing leverage, will begin to exhibit cracks at their façades. They will need to be restructured.
The spectacular private equity returns achieved in China and India in the last three years will not be repeated again in the next three years – they will be substantially lower. Those spectacular gains were part of a 'one-off' event associated with the fruits of a decade of economic reforms, market deregulation and integration into the world economy.
The fourth 'investment wave' in China since economic reforms began in 1978 will come to an end. Not to worry – there will be a fifth wave …… and a sixth.” KY Tang, chairman and managing partner, Affinity Equity Partners
Affinity Equity Partners has, in recent weeks, made its exit from Himart, a Korean electronics retailer it backed in March 2005. The sale to a local strategic buyer is set to return Affinity more than two times cash. Goldman Sachs advised on the transaction.
Before the divestment from Himart, Affinity made headlines for completing the take-private of Singapore-listed United Testing and Assembly Centre, a chip testing business, together with TPG Capital. The $1.4 billion buyout obtained the first, and some say last, covenant-lite financing deal in Asia.