Private equity firms are cutting after over-expansion too
Private equity fund Warburg Pincus has reshuffled its senior management and cut jobs in China after a period of breakneck expansion.
Sources say that the bank has cut around 10% of its 100-strong team serving China. According to Bloomberg two partners, Vera Yang and Gordon Ding, and at least five more junior staff are leaving as the firm reduces its team specializing in consumer and internet investments.
Yang left just a year after joining as managing director with a focus on the consumer sector. A former banker with JPMorgan, Yang joined Warburg Pincus from NYSE, where she headed the US exchanges’s China business, bringing more than 30 leading Chinese companies to the US before a regulatory clampdown.
By contrast, Ding joined the firm in 2009 and focused on investments in the technology, internet, media and education sectors in China and Asia.
The departures come after Julian Cheng retired from the firm in September after two decades. Cheng, who was co-head of China for Warburg Pincus, is said to be setting up a family office. Frank Wei, his fellow former co-head will now run the business on a sole basis.
Warburg Pincus has been a prominent investor in China and while it may be dialling back on investments in the technology sector, it has recently become one of the most active investors in Asia real estate. Last December it announced the closure of the Warburg Pincus Asia Real Esate Fund with committed capital of $2.8bn. It said at the time that this was “the second-largest active opportunistic real estate fund in Asia.”
Warburg Pincus has a strategy to invest in ‘new economy real estate,’ with a focus on China. It co-founded D&J China, an industrial real estate platform that last December merged with logistics property developer and operator New Ease China to create a $11bn company to invest in China’s new infrastructure.
One China-based headhunter said he had seen no evidence yet that other private equity funds are cutting staff amid a deal shortage. “Warburg Pincus has been very aggressive hiring in China and was still building its China tech team last year. It’s probably over-expanded, while Cheng’s departure suggests there’s a shake-up going on at the top,” the headhunter said.
Warburg Pincus didn’t respond to a request to comment. It's not the only private equity fund cutting staff: SoftBank cut 30% of people working for its Vision Funds in late September.
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