Giant on the move
How cheap is cheap?
That was the most frequently asked question among bankers and private equity experts attending a recent forum in Hong Kong, as they swapped strategies about how to pick up stressed assets during the financial crisis.
But one year on, many global markets have bounced off the bottom and some have recovered quite nicely. The Shanghai benchmark index, for instance, has gained more than 50 percent since the beginning of this year. As a result, views among bankers and top investment strategists about ongoing risks to the business outlook have started to diverge.
“Valuation is still a big threat,” said Michael Kim, a former senior Carlyle executive who founded MBK Partners after leaving the U.S. buyout giant.
Many Asia bankers and dealmakers are based in Hong Kong but nowadays many of them only stay in the territory for weekends. So where are they during the rest of the week? China, of course.
With deal flow suddenly picking up, it’s getting difficult to fix lunch or dinner appointments with bankers in Hong Kong during the work week, because they spend more time in Beijing, Shanghai and other mainland cities to have food or drinks with the potential China clients.
Last week, one Hong Kong-based private equity dealmaker canceled an appointment in the
former British colony at the last minute, saying he had to remain in Beijing to wait for a Chinese entrepreneur to sign a deal.
In an apology email, he said: “To be honest, Hong Kong to me is purely like a weekend destination these days.”
Another friend who works as a private equity investor once joked he and many others are merely “so-called Hong Kong-based” workers.