Singapore-based private equity firm Archipelago Capital Partners is targeting to raise up to $250 million for its latest fund – Archipelago Asia Focus Fund II – that will invest in small and midsized companies in Southeast Asia.
The fund will primarily focus on control situations across three core sectors – consumer goods and services, financial services, and industrials and logistics. It aims to make 7-10 investments in companies in the region, with a specific focus on Indonesia and the Philippines, and Thailand and Malaysia on an opportunistic basis.
The firm’s debut fund closed at $75 million in May 2019.
The International Finance Corporation (IFC), a member of the World Bank Group, has proposed a $25 million equity investment into Fund II.
In its disclosure, IFC said Archipelago’s second fund will deploy 40-50 per cent of its corpus in companies operating in the Philippines. The fund, it added, will provide access to private equity to mid-cap companies in Southeast Asia and will “increase investee growth” through the PE firm’s control strategy.
Last year, Archipelago’s subsidiary, Osmanthus Investment Holdings, completed its acquisition of a 15-per cent stake in One Network Bank Inc (ONB), the rural banking arm of the Philippines’ largest lender BDO Unibank.
Archipelago Capital Partners was founded in 2015 by Jovasky Pang, Kiat Chan, and Eng Khim Lim.
Prior to the establishment of the PE firm, Pang had worked with Fullerton Financial Holdings, an investment arm of Temasek Holdings, while Chan and Lim previously were key members of the corporate finance practice in Southeast Asia at McKinsey & Company.
The Philippines, a primary focus of Fund II, remains a small market for private equity investing as most business owners in the country are still slowly adopting the idea of creating and selling businesses.
Two of the country’s PE investing pioneers are Sierra Madre Capital and Navegar. Sierra Madre raised its first fund – Sierra Madre Philippines I – in 2017 at over $50 million, with just over a quarter of the fund already deployed.
Last year, Navegar made an initial close of its new fund – Navegar II LP – at $87.1 million. The fund invests in middle-market, growth-oriented companies in the country, with a target investment size of up to $18 million. The fund received $20 million from the IFC.