Southeast Asia will benefit from the trade war
In a recent interview with Dealstreet Asia, Kyle Shaw, Founder and Managing Partner of ShawKwei said:
” Countries have always competed on economics it’s just that now you’re seeing it a lot more vividly due to media coverage and certain animated politicians. The conflicts between China and the US, Korea and Japan, Germany and Europe, and the UK and Brexit are not just affecting two countries but are creating disruptions across multiple economic areas. I think that Southeast Asia will be a net beneficiary of these disruptions because of its low profile and well-established supply chain and advanced manufacturing capabilities.
Not all of the supply chain in China will relocate out of China because of tariffs, but Europeans and Americans will seek to rebalance their supply chain between Southeast Asia and China. There is also an abundance of skilled and educated workers in Southeast Asia with a 600 million population sitting at a crossroads between India and China with a friendly political footprint around the world. Trade wars in all the locations previously mentioned actually create disruptions which for private equity can be good if you are anticipating it and positioning yourself to take advantage of it. “
Founded over two decades ago, ShawKwei made a final close of its fourth pan-Asia vehicle – the Asia Value Fund 2017 – at $812 million last October. The firm invests in B2B sectors such as precision engineering and manufacturing, automotive, maritime, oil and gas services and solar power.
On fundraising, many global firms are raising larger Asia-focused vehicles to enter the region. Do you see the competition getting more intense in the PE space? Dealstreet Asia asked Kyle for his comments, Kyle said:
” I think the Asian PE competition is already intense. With a softer economy, fundraising will be more difficult and doing deals and managing portfolio companies will also be more difficult. There’s going to be a shakeout in the PE industry in the future. The easiest thing a private equity firm does is make a new investment but getting out of it? That’s the hard stuff. I expect soon you will have less new players coming into PE and some people who are not really committed for the long run will exit the Asian PE space. ”
For more highlights of the interview, please click here.