Candover Asia looking for the next Dr. Reddy's
HONG KONG (Reuters) - Candover's fledgling Asia unit is seeking deals in the consumer, industrial and energy sectors, with a focus on linking up with mature, market-leading businesses, regional head Jamie Paton said on Tuesday.
Candover (CDI.L), the London-based and publicly traded private equity group, hired Paton in February from rival 3i (III.L) to launch its Asia operation.
Paton is a one-man show at the moment, planning to add three to four professionals soon to the small Hong Kong office. He also expects to open an office in Mumbai.
Paton pointed to Indian auto giant Tata Motors (TAMO.BO), which agreed last month to buy Jaguar and Land Rover from Ford Motor Co (F.N), as a model for potential home-grown Asian champions.
"Can you find high-quality, sizable business like that in China or India to support making acquisitions both domestically and internationally?" he posed, speaking at the Reuters Hedge Fund and Private Equity Summit on Tuesday.
"Can you find the Dr. Reddy's five years before (it becomes a major global player)," he added.
Dr. Reddy's DRRD.BO, an Indian pharmaceutical company with a market capitalization today of $2.5 billion, bought a German firm from 3i in February 2006.
"That's the kind of place where Candover will go hunting for opportunities, not someone living off a low-cost manufacturing base."
Paton cited a statistic that estimates around 500 million people in China and India will look to buy homes in the next 10 years. That creates investment opportunities in consumer areas such as food, financials and media, he said.
The other area Candover is focusing on in Asia is energy.
"The amount of work required around the services involved, as China and India develop its own oil and gas industries, is huge," he said. "The opportunities to invest in pipe companies, security people -- anything around drilling -- is really interesting."
Compared with other Western buyout firms, Candover is late to Asia. A wave of private equity houses moved to Hong Kong a few years ago. That move came after firms such as Carlyle Group CYL.UL and Warburg Pincus set up shop in the region more than a decade before that.
"If you look at GDP growth and the attractiveness of the region, private equity is a long-term investment," Paton said. "Whether we were here two years ago or in two years' time, you have to start somewhere."
With offices in London, Madrid, Milan and Paris, Candover has invested in 11 countries across Europe since its first deal in 1980. The firm owns luxury yacht maker Peretti and professional publisher Springer Science & Business, among other companies.
(Editing by Will Waterman)
