Hillhouse Chairman Zhang Lei said the next few years could produce the “best vintages for private equity” in Asia due to falling valuations that provide investors better bargains.
“The best companies are built in the worst, challenging times,” said Zhang, founder of the $80 billion investment house, adding that “you’re going to see the greatest companies in the making in this period of time.”
Even though Zhang’s portfolio companies are facing headwinds, he said the companies that improve on technology and align with suppliers and distributors can withstand the downturn.
“I’m trying to tell my management, you don’t need to be super smart, all you need to do is be consistent, be long term, steady hands and do the right thing,” Zhang said at the Global Financial Leaders’ Investment Summit in Hong Kong on Wednesday.
Private capital raised in Asia-Pacific by the end of the third quarter this year totaled $67 billion, only 39% of last year’s amount, according to Preqin. Private equity funds, particularly those that focus on China, are raising substantially less than before, the researcher said in a Oct. 31 report.
Preqin forecasts that the region’s private capital is on course for the lowest fundraising in a decade.
Under the challenging environment, Zhang said he expects other private asset classes to grow in Asia, including private credit, real estate and infrastructure.
