In part I of a two-part series, we examine the employment market in Asian private equity.

It’s far too soon to talk of a boom, but private equity employment is slowly emerging from the severe slump of the last few months.

Large firms like KKR and Carlyle, armed with new capital, are hunting for hidden, undervalued opportunities in Asia. They are also starting to hire again in the region, although their recruitment remains selective.

Private equity has never reached the same scale in Asia as in the US and Europe, so firms here are not so tied down by underperforming investments. Analysts quoted recently in the Financial Times estimate that private equity funds have an unspent war chest of about US$20bn to lavish on Asian buy-outs.

With the industry now focused on Asia – in particular China and India – Hong Kong could be the key city to benefit because it provides PE firms with a gateway to the PRC.

David Koo, director, Lion Rock International, says there is more PE hiring happening in Hong Kong than there was six months ago. “But it’s not like in 2006/07 when lots of new players were entering the market.”

The situation is improving in Singapore too, says Gary Lai, manager, financial services at Robert Walters. “Over the last month there’s been a bit of a buzz in the market. I have recently received more enquiries from private equity firms about interviewing people,” he adds.

Despite these promising signs, vacancy volumes are low – still about 75% down on 2007 numbers, according to Lai. And with the employment market keeping tight, PE firms can afford to be picky about who they hire.

Things get tighter for i-bankers

Before the financial crisis, an investment bank’s M&A team was the traditional place to poach budding PE professionals. But while i-bankers aren’t completely out of favour, PE firms in Singapore are starting to search in the corporate sector, says Lai. Professionals in internal M&A or business-development roles in larger companies are at the top of their hit list.

“Firms are still cautious about hiring. They want industry knowledge. This is especially the case in funds which have a specific focus, such as energy or infrastructure. They increasing like to employ professionals from those industries,” he adds.

In Hong Kong, your networks in (and knowledge of) China are key to landing a PE position. But, according to Koo, there is a shortage of M&A bankers who are sufficiently “China enabled”. Many PE funds would rather hire from their rivals, rather than from banks, because these candidates can hit the ground running.

International PE firms mainly target professionals at the execution level, with some deal sourcing capability, says Koo. "They want candidates who can bridge the gap between international and Chinese business culture, so along with having experience in the Chinese market, ideal candidates need to be bilingual and have a great understanding of the two cultures," he adds.

Lai says PE experience is sought after in Singapore too, especially for mid-level jobs (requiring about five years’ experience). “But if you’re looking at a senior person whose fund no longer exists, questions will be asked about his decision-making role in the failure. At that level, you must have a solid track record, otherwise it will raise eyebrows.”

In part II, to be published on Friday, we look at the contrasting fortunes of contracting and back-office jobs within private equity.