Welcome to our 2021 Asia Pacific Private Capital Investment Professional Compensation Survey, the eighth annual edition.

Our goal is to provide the industry with the clearest and most up-to-date analysis on how compensation is evolving across strategies and levels as private capital grows and matures in Asia Pacific. This year’s survey comes as the global economy grapples with the ongoing pandemic and attempts to return to in-person business operations.

Responses from 192 participants are included in the survey results. Our private capital team and consultants across our industry practices spend significant time engaging with clients across the deal cycle. We hope this survey is useful to you and welcome questions and comments.

Highlights

After a year of subdued growth due to the pandemic, the Asia Pacific private capital market is recovering its strength, and most survey respondents expect it to continue that way. This sets a favorable context for hiring and compensation trends.

The Asia Pacific private capital market has experienced impressive growth in the last five years. According to a new report,¹ assets under management (AUM) totaled a record $1.71 trillion as of September, a nearly three-fold increase in just those five years. Combine this with the $156 billion held by Asia Pacific hedge funds as of Q4 2020, the industry is closing in on $2 trillion in aggregate assets. The report notes an expectation that private capital AUM targeting Asia will reach $6.1 trillion in total assets by 2025.

There are many strengths to the Asia Pacific market, from the typically dynamic Chinese economy to rising numbers of middle-class and high-net-worth individuals, and the growing coffers of pension assets. Interest in alternative assets is rising, though not yet matched by deal flow. Owners remain staunchly in control of their businesses, and exit liquidity remains scarce.

Survey respondents report strong market sentiment across most of the region. (See chart, “Market sentiment by region,” on page 6 of the full report.)

By strategy, market sentiment is strongest in credit and special situations, with 76% of respondents seeing the outlook as somewhat better or much better. Sixty-eight percent said the same for real estate. Negative sentiment is strongest in buyout, where 39% see the outlook as somewhat worse, much worse or uncertain. (See chart, “Market sentiment by strategy,” on page 6 of the full report.)

Hiring has been robust in the Asia Pacific private capital market and our survey shows that cash compensation is on an upward trend overall. That said, just over a third of respondents (35%) expect their base to increase in 2021, down from the 41% who had expected an increase in 2020. The outlook for bonuses has stayed essentially flat. The share of respondents who report receiving carry rises from 40% at the associate level to 86% at the managing partner level. (See charts, “Respondent cash compensation development 2019–2021” and “Compensation trends” on page 7 of the full report.)

State of investment professional compensation

Compensation at global funds and regional funds

Investment professionals at regional funds reported higher median base compensation in 2021 than did their peers at global funds (those that invest only partially in Asia Pacific) at all levels of seniority. But total cash compensation is higher at the global funds. (See charts, “Global funds: Base, bonus, and total cash compensation, 2019–2021, and carry” and “Regional funds: Base, bonus, and total cash compensation, 2019–2021, and carry” on pages 8 and 9 of the full report.)

Compensation by strategy

Professionals at buyout funds reported the greatest variability in median compensation across levels, and managing partners at buyout funds once again reported the highest total median cash compensation. (See charts, “Buyout funds: Base, bonus, and total cash compensation, 2019–2021, and carry,” “Growth capital funds: Base, bonus, and total cash compensation, 2019–2021, and carry,” “Real estate funds: Base, bonus, and total cash compensation, 2019–2021, and carry,” “Venture capital funds: Base, bonus, and total cash compensation, 2019–2021, and carry,” "Credit/special situation funds: Base, bonus, and total cash compensation, 2019–2021, and carry,” and “Fund of funds: Base, bonus, and total cash compensation, 2019–2021, and carry,” on page 10–15 of the full report.)

Compensation by fund size

The overall upward trend in cash compensation by most recent fund size continues. There was a notable rebound in bonuses for partners/managing directors and partners at firms in the $500.00m–$1.00bn range. By platform AUM, compensation is strongest, as usual, in the upper range. (See charts, “2020 mean base, bonus, and carry by seniority and most recent fund size,” “Base, bonus, total cash compensation, and carry for current fund,” and “Base, bonus, total cash compensation, and carry for platform AUM” on pages 16–24 of the full report.)

About the authors

Shadi El Farr (selfarr@heidrick.com) is the regional managing partner of Heidrick & Struggles’ Financial Services Practice in Asia Pacific and the Middle East and a member of the Private Equity Practice; he is based in Heidrick & Struggles’ Dubai office.

Stephen Zhang (szhang@heidrick.com) is a partner in the Hong Kong, Beijing, and Shanghai offices and member of the Private Equity and Financial Services practices.

References

¹  Preqin Markets in Focus: Alternative Assets in Asia-Pacific, Preqin, June 17, 2021.

Acknowledgments

The authors wish to thank Mohd Arsalan and Daria Sklyarova for their contributions to this report.