How did the deal with TPG come about?
The transaction came about through direct discussions with top TPG management. I don’t think either side was thinking about a strategic partnership like this when we first began to engage. So, it happened quite naturally. We understand TPG had been examining the secondaries space over the past few years and had found secondaries markets in the US and Europe to be quite efficient and highly competitive. As we continued to exchange views about the Asian secondaries landscape, we found that we shared a common vision that could form the basis of a successful partnership.
Was this a competitive process? Why did you choose to partner with TPG?
No, the partnership evolved purely from bilateral discussions over the course of roughly one-and-a-quarter years. The more time we spent with each other, the more we found commonalities – such as firm culture, direct investment DNA, market view, and so on. We found TPG to be one of the most creative global firms in the market today and one that truly understands complex transactions. Having a partner like TPG who understands how we can expand our platform in a rapidly growing space which is underdeveloped, and create new opportunities for our investors, will continue to support our growth across the Asia Pacific region. The firm’s deep track record in building businesses and the accessibility of its leadership team also made it the ideal partner for a growing manager such as NewQuest.
What does NewQuest’s ownership structure look like now? Who are the other shareholders?
With TPG’s entry, we have now added a significant strategic minority shareholder. The other shareholders have not changed and the partners of NewQuest will continue to make all investment decisions. The transaction was structured to create maximum benefits to both parties as well as meaningful alignment for all stakeholders, including our investors.
How will TPG’s involvement help NewQuest to source deals? Which areas do you expect the partnership will help open up?
We envisage the strategic co-operation to cover a wide area with respect to growing our platform and further securing our market-leading position for the next five to 10 years. Ultimately, it will allow us to continue to provide attractive products with superior returns to our investor base.
What types of “new opportunities for investors” do you expect to launch? Will you make more hires or open more offices?
We have plans to expand into adjacent strategies within the secondaries space. In fact, we are already doing that now. When we first launched NewQuest more than seven years ago, we only focused on secondary direct acquisitions. Now, we are also leading complex fund solution transactions, where we partner with incumbent GPs to acquire portfolios or restructure existing funds. We currently have three offices located in Hong Kong, Beijing and Mumbai and would expect to continue to grow those teams as we scale our business.
Do you now have plans to invest in deals outside the Asian region?
We have enough to focus on within Asia for the time being.
Darren Massara has two decades of experience in private equity in emerging markets and before he worked at NewQuest was managing director at Bank of America Merrill Lynch. He spent over eight years at the World Bank Group in Washington DC and worked in various capacities for the US government and the private sector on international trade and investment issues.