Infrastructure investments and private equity are gaining traction among Asia’s increasing sophisticated private wealth clients due to benefits including diversification and income generation, alternative investment heads said during a discussion at Asian Private Banker‘s Alternatives in Focus 2025 event.

The gala event, hosted at the Mandarin Oriental hotel in Hong Kong, gathered around 100 of the leading alternative investment executives at regional private banks, independent asset managers and family offices. The Singapore leg of the event will be held later this week.

Increasing sophistication

Pamela Fung, Morgan Stanley Private Equity Solutions

Private wealth clients in Asia are becoming increasingly sophisticated when it comes to private equity solutions, according to Pamela Fung, managing director at Morgan Stanley Private Equity Solutions in Hong Kong. Catering to this growing clientele requires new strategies and perspectives.

“They turn to groups like us because they’ve dabbled in private equity before. They’ve invested in certain funds, maybe even invested in specific deals. A lot of them skew towards the tech side, but they’re realising they want to do it in a proper, systematic way,” said Fung, who has a background in working with institutional clients on the private equity portion of their portfolios.

Fung observed that private wealth investors – such as individuals and family offices – expect the same treatment as institutions. That is partly because many private wealth clients have prior experience working for large institutions, such as investment banks and hedge funds. “They wanted to be treated like an institution,” she explained.

Eyes on infra

Albert Yang, J.P. Morgan Private Bank

Infrastructure investments have seen increasing attention in client discussions over the past 18-24 months, leading to higher asset allocations, explained Albert Yang, managing director and head, alternative investments group Asia at J.P. Morgan Private Bank. According to Yang, the asset class can deliver double-digit returns.

Clients appreciate the defensive nature of infrastructure, using it as a stable, less correlated part of their portfolios, and think of it as a source for income distribution, Yang explained.

Infrastructure is now more suitable for private wealth clients than in the past thanks to newer, more liquid structures, believes Yang, as previously its illiquidity meant it was more the domain of institutional investors. “The structure of these infrastructure investments now is a lot more friendly than what it used to be [with] a very long-term lock-up, where it’s typically institutional,” said Yang.

Educating clients

However, clients often need help understanding how to assess and deploy infrastructure solutions, the panellists agreed. Derek Craig, director, global client solutions at KKR uses the acronym ‘HELP’ as a framework for analysing potential investment opportunities. It stands for: Hard-assets-backed business; Essential services; Long-term visibility and cash flows; and Privileged market position.

“With those four characteristics in place with infrastructure, you are able to get those main benefits,” said Craig.

Derek Craig, KKR

He believes infrastructure meets the needs of Asian investors looking for consistent, uncorrelated cash flows in times of high inflation and geopolitical uncertainty. Infrastructure’s involvement in the provision of everyday services and the often  monopolistic nature of these companies gives them wiggle room to increase prices during times of rising inflation.

Infrastructure is not just assets like bridges, tunnels, roads and ports, but is increasingly becoming focused on digital hardware, such as data centres, which support the growing processing power required for fast-growing areas of technology like artificial intelligence.

Perfect playground for PE

Morgan Stanley’s Fung highlighted mid-market companies as another opportunity in private equity, citing modest valuations and little correlation with public markets.

“You can then put in the right management team, augment what they’re doing, improve how they’re running in terms of efficiency, help the company grow, making new customer introductions, maybe do more M&A,” said Fung.

“This is a clear playbook to create value in these smaller family-run businesses. And we find a lot of sponsors just do the same thing, day in, day out, and they can make very, very consistent returns. So, if you look at the median performance in that segment of the market, it’s been consistently very strong going to Asia.”

However, Fung also cautioned that a more nimble approach is typically needed in Asia due to the rapid changes in the region’s markets.

Having a wide spectrum of strategies in terms of geographies, industries, and style, Yang noted that inflation, interest rates, and geopolitical tensions have made the operating environment more challenging for families and businesses in Asia.

“I think this is the perfect playing ground for the controlled, buyout type of transactions and deals,” said Yang. “We love it. We think a lot of companies probably need some professional help in terms of how to help the operations, improve margins [and] revenue growth.”