Asia’s family-owned firm founders seek private equity exit NEWER ASIAN FOUNDERS PREFER TO SELL THEIR BUSINESS

Dealmakers across Asia are busy fielding calls from company founders who are mulling letting go of their life’s work as the Covid-19 pandemic has upended how global business is done.

After riding the region’s rise over the past decades, family firms that dominate the economic landscape are now also looking for bigger partners, help to modernise management teams and in succession planning, according to consultants, bankers and private equity firms.

“We’ve seen founders, particularly the older entrepreneurs, saying there are more challenges in the world now and that they’re thinking about succession issues and management issues,” said Ed Huang, co-head of Asia acquisitions in private equity at Blackstone Group. “Private equity is better understood now as either a potential strategic partner or as an exit path.”

The shifting sentiment could spell seismic moves in capital. Just publicly listed family firms in Asia have a market capitalisation of more than $5.56 trillion, according to Credit Suisse Group AG. In Hong Kong and Singapore 70 per cent and 60 per cent of listed firms, respectively, are family-backed businesses, a report from the Family Firm Institute showed. Recent deals include a CVC Capital Partnersled privatisation of Hong Kong fashion chain IT as well as a takeover by TPG and Northstar Group of a unit of Singaporebased food company Japfa.

There’s a bottleneck of deals after dozens were put on hold during the pandemic and escalating political tensions between the US and China. As the region recovers, Huang said he expects to see more deals as companies and owners re-visit strategic initiatives, capital needs and exits.

Pankaj Goel, Credit Suisse’s co-head of investment banking and capital markets for Southeast Asia and frontier markets, said the region could be in line for a “many-fold” increase in deals already this year. He singled out sectors such as consumer, health care and technology as key areas. Compared with their counterparts in the US and Europe, many Asian family firms are relatively young and are facing a generational transition.