Squadron plans $400 million fund for Asia

By Dominic Whiting

HONG KONG (Reuters) - Hong Kong-based Squadron Capital plans to raise a $400 million fund this year to pour into Asia private equity funds, hoping for fat returns from investment in firms tapping a consumption surge in the region.

Squadron's chief executive David Pierce said the fund of funds, to be launched in May, would particularly target India and China, where retail sales are rising at around 20 percent annually.

"Our growth capital managers in both places are looking at the consumer story very hard," Pierce told a Reuters hedge fund and private equity summit in Hong Kong.

Pierce admitted the domestic consumption theme was nothing new and ran through many investment strategies in Asia, but he said few investors had the local knowledge and connections to push through deals.

"There are a lot of players relative to the past, people know what these themes are and what can be done, but it comes down to who has the ability to source and execute transactions," he said.

"Our managers are now rolling up their shirt-sleeves and working these transactions through," Pierce added.

Squadron, which closed a $300 million fund of funds in February, has already funneled around 70 percent of that investment through 14 private equity fund managers in the Asia-Pacific region.

They include Hony Capital, a specialist in privatization of Chinese state-owned assets, Australian buyout fund Archer Capital, and India's Avigo, which invests growth capital in small manufacturing and engineering services businesses.  Continued...