New capitalist processes, interdependence and the Asia–US private equity relationship

Abstract

Private equity has had a short but eventful history in East Asia, characterized first by US firm dominance and then by a nationalistic backlash. This article charts these earlier patterns, but argues that significant developments have taken place since the early 2000s, which have strengthened the position of private equity capital in the Asian political economy. As private equity deal-making has returned to Asia, new linkages have been formed between US private equity funds and local private equity players. Of particular importance have been US–Asian joint ventures, Asian nationals returning to domestic firms from US private equity houses and supportive local elites in the banking and pension fund sectors. The significance is two-fold. First, the spread of private equity has been founded on interdependent relationships between US actors and local actors, which have more successfully grounded the private equity industry in national political economies than its origins in the Asian crisis period. Second, despite the relative localization of Asian private equity, industry practices are still largely shaped by the US model of private equity and the merger and acquisition activity that it entails, rather than a distinct Asian private equity model. The findings of the article contribute to calls that have been made for research on the changing global economy that comprehensively integrates domestic and international levels of analysis.