Providence Equity Partners has lost another top executive in Asia, its fourth senior departure in the region since 2008, as it struggles with a limited supply of suitable investment targets and a shrinking volume of Asian private equity deals.
For Providence, the supply of companies is particularly restricted because it focuses on technology, media and telecom investing, and education.
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Patrick Corso, a managing director, has stepped down as head of Providence's Hong Kong office, people familiar with the move told Reuters.
The reasons for the U.S. buyout firm's turnover at the top in Asia are unclear. Rhode Island-based Providence has had a relatively low profile in Asia - especially outside of India - compared with its global peers, at a time when a dearth of asset sales has tended to give an edge to funds with a broader focus.
Providence's Asia shake-up also revives a debate over whether private equity firms in Asia are better off pulling money from a regional fund or from a global one.
"Regional and country funds allow private equity firms to be more nimble and flexible on investments, and create local teams with specialist knowledge on markets," said Jon Parker, principal, transaction services at KPMG.
Corso's duties will be divided between Tao Sun, who will oversee Greater China, and New Delhi-based Biswajit Subramanian, who will be responsible for the rest of the region, one of the people said.
Subramanian is a 13-year veteran with Providence, who has been a driving force behind the firm's Asia investment portfolio. Providence has invested approximately $2 billion in Asia-Pacific based companies, according to the person.
For a private equity firm, continuity in the top ranks is critical, as it helps to win the trust and support of potential investment partners and corporate executives.
Providence Equity was founded in 1989 by Brown University graduate Jonathan Nelson, who remains in charge. The firm is investing a $12 billion global fund, which it says is the largest sector-focused fund ever raised.
Providence and Corso declined to comment. Corso has gone on to launch his own private investment company, said people familiar with the matter, who declined to be identified as the information is not yet public.
Though it invests in Asian companies through a global fund, Providence has plans for one region-focused vehicle that are in the works.
Providence is planning to raise its first yuan-denominated fund, according to one of the people, with the timing and size to be determined. Private equity data provider Preqin reported last month that Providence has established a partnership with the Hangzhou Municipal Government Financial Affairs Office.
Several of Providence's peers, with the backing of Chinese investors, have established yuan funds as a more efficient way to invest directly in China.
PRIVATE-EQUITY DEALS FALL
While Providence has built a successful franchise, with several big-name investments including Warner Music Group and Univision Communications, its Asia track record is, by comparison, more modest.
Its last Asian deal was an investment in an Indian electronics and appliances e-commerce company, StarCJ, in December 2012. In March 2012, it bought a stake in Hathway Cable and Datacom Ltd , a cable broadband provider in India.
Providence's other Asian investments include India's Idea Cellular Ltd , Australian education company Study Group, and Hong Kong's largest broadcaster, Television Broadcasts Ltd.
Corso's exit is the latest in a series of departures by senior Asia executives that have dogged the firm for years.
Providence announced the hiring of Andrew Rickards as a managing director in January 2007, selecting the former Asia chief executive officer of Rothschild to head its Hong Kong office. Subramanian was appointed to his New Delhi role around the same time that Rickards joined.
In April 2008, Reuters reported that Rickards had left the firm. Providence's China dealmaker, Sean Tong, left in 2011 to join private equity firm Boyu Capital. Michelle Guthrie, another managing director in the Hong Kong office, who also held a senior role, left in 2010.
The departure of Corso, a 10-year veteran of Providence and former investment banker with Morgan Stanley and Credit Suisse in London, comes as private equity-backed mergers and acquisition volume in the region is falling for a second year in a row.
First-quarter private equity-backed Asia-Pacific ex-Japan M&A fell 9.8 percent from a year ago to $5.1 billion and is down 48 percent from the 2011 high of $9.8 billion, according to Thomson Reuters data.
Even in a tough environment, however, U.S. private equity firms Carlyle Group , KKR & Co and TPG Capital have managed to secure big investments in Asia through regional funds, earning huge profits from a handful of choice deals.
Sector-specific buyout firms such as Providence and tech-focused Silver Lake Partners LP, both investing in Asia from global funds, have not seen the same flow of deal activity that their competitors have.
KKR, which arrived in Asia around the same time as Providence, has 10 portfolio companies in China alone, according to its website. Silver Lake has scored one major Asian investment, scooping up a stake in China's Alibaba.
"Global funds can be difficult if you have to continually go to an overseas investment committee for approval," KPMG's Parker said.
(Editing by Michael Flaherty, Edmund Klamann and Chris Reese)