Compensation For Asia's Private Capital Professionals Decelerates - Study

Tom Burroughes

6 April 2017

The years of steady pay rises for private capital professionals in Asia may be hitting a wall, according to a compensation survey of the sector by executive search and consultancy firm .

In the fourth annual edition of the Asia Pacific Private Capital Compensation Survey, the firm says the trend of rising compensation slowed last year, while the number of investors reporting increases in their base salary and anticipating increases in their bonus fell compared to previous surveys.

Almost two-thirds of the 210 respondents said there was no change to their base salary in 2016 and only 38 per cent expected their 2016 bonus to increase over the prior year. In last year's survey, nearly half of respondents said they received an increase in base salary and 45 per cent anticipated a higher 2015 bonus.

The climate has cooled for people working in private capital markets, the authors of the report said. The area of private capital (private equity, debt, infrastructure and real estate) has been busy in recent years, because the promised superior returns to compensate for less liquidity have attracted investors

"It was a challenging year in 2016 for private markets investing in Asia Pacific, and that's going to affect compensation growth," said Michael Di Cicco, partner, head of APAC private equity and real estate at Heidrick & Struggles. "Asking prices are high and competition is tough. Investments and exits were down both in terms of the number of deals and the overall value."

Investments in the region were $120.4 billion in 2016, down from $142.9 billion in 2015, according to Asian Venture Capital Journal. While investments continue to be considered strong, a small number of mega investments accounted for nearly 30 per cent of the 2016 total.

Compared with other Asia-Pacific countries, China reported the highest compensation including anticipated bonuses due to the aggressive competition for top professionals and premium on investment in talent.

Private capital professionals located in China and Hong Kong received the highest total compensation across the region, with a mean salary base of $325,890 and mean bonus of $343,050, while professionals located in India received only 44 per cent of their China-based counterparts' compensation.

This year's survey includes compensation data from 2016, 2015, and 2014 as well as expected compensation development in 2017. The report evaluates trends in compensation packages, including base salary, bonus, and carried interest plans. Additionally, increased demand for venture capital investment professionals, particularly in Southeast Asia and Greater China, prompted an additional category for venture capital funds for the first time in this year's survey.