Chen will answer to Guido Paolo Gamucci, chairman for Asia-Pacific. Gamucci also oversees the Tokyo office.
Given Goldman SachsÆ recent lustre from its successful navigation of the subprime crisis, the hire has been seen as a coup for Permira. The presence of Goldman on his CV should also help open doors in Greater China, where Goldman has high recognition.
Chen was formerly co-head of the general industrials group for Asia ex-Japan at Goldman, covering industrials, transportation, consumer retail and healthcare. These areas will dovetail with the investment areas he will be looking at, say sources, as many of these are stated focus areas for Permira.
One banker says that Chen will have no problem fitting into PermiraÆs private equity culture. ôNascent private equity markets (as in Greater China) call for many of the same skills that investment bankers have. Essentially, itÆs about originating deals,ö says the source. ôItÆs only in more developed markets that investment bankers and private equity bankers need divergent skill sets.ö In addition, Chen will be anchored by Gamucci and another experienced Permira bankers based in Hong Kong.
Chen is likely to have a huge network of contacts from his time at Goldmans. This should give him a valuable advantage in sourcing deals.
The banker quoted above admits that it is likely that this year will be slow in Asia, but that ôPermira is building a long-term franchise. So now is as good a time to hire as anyö.
Permira announced last year it would be setting up a Hong Kong office in the first half of this year.
Chen was also chief operating officer of corporate finance at Goldman where he led deals such as LenovoÆs acquisition of IBMÆs PC business and the merger of MTR Corp with KCRC. Chen received his BA and MA from Harvard University and a Juris Doctorate from Harvard Law School.
Permira has had an office in Tokyo since 2005, but only closed its first Japan investment in February this year. That was the acquisition of Arysta LifeScience, an agrochemical business headquartered in Japan, from Olympus Capita, for $2.2 billion, which was announced in October last year. Just before it announced the Arysta deal, Permira acquired a 20% stake in the Galaxy Entertainment Group, a Macau-based gaming group, for $840 million. Both deals were inaugural deals in their prospective markets for Permira.
Notably, Permira made the Galaxy investment on an unleveraged basis. The Arysta investment was leveraged and, in an exclusive interview with FinanceAsia in December, Gamucci commented that Permira's "ability to raise competitive financing no doubt helped" the firm emerge as the winner in the Arysta auction which saw interest from strategic buyers as well as other financial sponsors.
The private equity market has been soft this year, as raising financing has become more difficult in the wake of the credit crunch. According to Dealogic, the market volume in Asia ex-Japan has totalled $13.5 billion year-to-date, compared to $21.5 billion over the same period last year. Europe is the biggest market in the world for buy-out deals, but even there the market has dropped to $82.3 billion so far this year, compared to $165 billion for the same period last year.
Not all markets have been equally affected. Japan, for example, has seen a slight rise in activity year-to-date to $6.5 billion, compared to $5.3 billion last year û indeed, Japan is currently the single largest market in Asia.
The rest of Asia put together (excluding Australia and India) is about as large as the Japan market alone.
India has increased slightly to $4.8 billion year-to-date, but China has dropped to $2.5 billion year-to-date from $3.2 billion for the same period last year. A marker for the closing of the Chinese market was the collapse of the Xugong Construction deal, in which Carlyle had hoped to take a significant stake, in July this year. The Chinese government appears reluctant to allow foreign private equity firms to take large stakes in major national companies.
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