The economic power shift from the western world to Asia is evident even in the world of investment management. Asian conglomerates are flush with cash and they are looking to the US for fund deals. For hedge fund and private equity firms, the enhanced interest could mean it is time to do business and sell.
The most recent example of Asian conglomerates’ interest to spend took place just this week. DealMarket reported on Wednesday on SoftBank’s move to buy a New York-based private equity firm. The Japanese technology and telecommunications company has openly outlined its interest to become a global player in the sector. Other notable deals include HNA Group’s purchases of SkyBridge Capital hedge fund and a New Zealand investment firm. The Chinese aviation and shipping company has also outlined its interest in a British insurer and its asset management unit.
The plan to go global
Asian conglomerates are looking to go global and they are moving in smart. These multibillion-dollar companies are not trying to cut deals out of their expertise, but have hired US-based banks to help them find investments. The interest for deals is especially strong in the private equity and insurance sectors.
HNA Group is looking to become a “global asset management business”. SoftBank’s founder has been even more ambitious in his remarks. Masayoshi Son, the billionaire behind the company, has said the aim is for SoftBank to become “Berkshire Hathaway of the tech industry.”
For private equity companies, the time to sell has not been more fruitful. Michael Rees, head of Dyal Capital Partners, told the New York Times, “The fund of fund industry is facing a lot more challenges that it ever has”. Disappointing performances and cheaper index-tracking alternatives have posed a challenge to the industry. The Asian conglomerates, with unquenchable appetite for deals could help the industry to diversify more and result in cheaper target acquisitions.
Gaining a toehold in the American investment world
The companies are scouring for US deals and the current climate might prove to be successful. SoftBank’s Son met with then the president-elect Trump, pledging an interest to invest $50 billion in the country. HNA Group deal with SkyBridge Capital has also been linked to president Trump through his close adviser Anthony Scaramucci, the founder of the asset management firm.
The information the conglomerates gain with these first-time deals with US companies is valuable in terms of their future in the country. The New York Times interviewed Ted J. Gooden, a managing director at Berkshire Capital, who said the companies “get a window on the U.S. hedge fund and investment industry. Gooden went on to state, “They understand how the markets are moving ahead of time and they get a view on our markets”.
While the headlines have not always been the right kind for the conglomerates making deals, it’s unlikely the interest is waning. The climate in the US is fruitful for deals, with the Trump administration looking to loosen financial rules and possible hikes in short-term interest rates by the Federal Reserves. Above all, the Asian giants are flooded with cash and thirsty for global domination.