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Buyout Firms Increasing Hiring in Emerging Markets

Reuters
Thursday, 24 Apr 2008 | 12:17 PM ET

Private equity firms are hiring more staff in emerging markets to keep up with faster growth opportunities in Asia and Eastern Europe.

China
AP
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Like many of the big banks, buyout firms such as Blackstone and CVC Capital Partners are moving key players from West to East and hiring locals in countries like Russia, China and India.

While a liquidity crisis has dried up financing for the kind of large leveraged deals in North America and Europe that distinguished the record buyout boom of the past few years, financial sponsors are scouring expanding economies from Moscow to Shanghai for investment opportunities.

"It's perceived as a long-term trend and these markets are more attractive from a growth standpoint,'' said Jonathan Rowland, European co-head of Citigroup's Financial Entrepreneurs Group.

"Deal activity in North America and Europe is depressed and will remain depressed for at least a year or two. While that is happening it is a trigger for private equity to redeploy people.'' Global merger and acquisition activity by buyout firms in the first quarter of this year fell 65 percent from a year earlier to $63.1 billion, according to Dealogic.

However, Asia Pacific, not excluding Japan, was the only region to experience a rise in volume, growing 15 percent to $5.8 billion.

In the next few weeks European firm Permira is relocating partner and head of Asia Pacific, Guido Paolo Gamucci, from Tokyo to Hong Kong to set up its new office there.

The opening follows Permira's first investment in Asia.

It bought a fifth of Macau hotel and casino operator Galaxy Entertainment for nearly $840 million in October.

The same month, Carlyle Group made a key hire in southeast Asia with the addition of Anand Balasubrahmanyan, a director charged with establishing a team dedicated to deals in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Russia, Eastern Europe and Turkey are drawing heightened private equity interest too.

CVC, which already has a strong presence in Asia and closed a $4.1 billion Asia Pacific fund last week, put Istvan Szoke, a former partner at Advent International, in charge of building up its business in Central and Eastern Europe earlier this month.

Meanwhile, Blackstone proved it was still very much interested in Turkey after missing out on the takeover of Turkish supermarket Migros to smaller rival BC Partners in February by creating a senior advisor position there recently.

Kemal Kaya will focus on developing business ideas and advising Blackstone on potential deals in the region.

Blackstone's rival buyout giant TPG is stepping up its operations in Asia and Russia.

A source familiar with the matter said that, depending on deal flow, the firm may open an office in Mumbai.

TPG already has one in Moscow and according to the source, is particularly interested in the Russian retail scene.

It's about to strike the biggest private equity deal in Russia so far, after recently agreeing to buy a 50 percent stake in Russian pharmaceutical distributor CIA International for $800 million.

Recruitment consultants said the hunt is on for local figures with good contacts.

Shaun Springer, CEO of Napier Scott, a recruitment firm that specialises in emerging markets in Eastern Europe and the Middle East, said most of the demand from private equity was for key figures with top-level contacts or board-level people that could be parachuted in to head companies in firms' investment portfolios.

"It's a very active market and we only really see it getting busier,'' he added.

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