Cathay Innovation, a venture capital fund affiliated with Cathay Capital Private Equity, has raised $550 million for its second global vehicle to invest across Europe, China, the US and Southeast Asia.
The venture fund, which counts China’s Pinduoduo as one of its major investments in Asia, has also opened its first Southeast Asia office in Singapore.
Cathay’s second global fund is mainly backed by European limited partners (LPs) including Valeo, Cardiff BNP Paribas Group, Telefonica, SEB Groupe, Michelin, Totale, Groupe ADP. It reached its first close at 320 million euros ($346 million) in June 2019, setting 500 million euros ($540 million) as its full corpus target. This has since shifted with the venture fund seeking a larger final close by the end of 2020. It did not disclose how much it aims to raise by then.
The second fund will be deployed globally, with one-third invested in Europe, one-third in China, and the remaining in other geographies, including the US and Southeast Asia. The venture firm also runs two RMB-denominated funds in China focused on mobility, smart city and energy sectors.
Cathay’s new Singapore office will be led by its former China-based partner Nicolas Du Cray, who relocated to the city-state in January to oversee its expansion in the region. Du Cray spent 18 years in Beijing and Shanghai across various companies, including Cathay Innovation, Iris Capital Management and Orange Capital.
According to Du Cray, the venture capital firm is seeking to invest in growth-stage opportunities in Southeast Asia, targeting ticket sizes of $8-20 million. It is aiming to make two to three investments a year in sectors such as digital health, logistics and fintech, which are poised to benefit from the recent disruption created by the COVID-19 outbreak.
“Southeast Asia is really a tipping point especially when you look at the rate the economy has been growing. It’s because of a few things including 4G infrastructure, access to smartphones, mobile internet and to some extent, logistics and the ability to do e-commerce. We believe that many of these models that we saw in China can be applied in other emerging markets in Southeast Asia, India and Africa. We want to anticipate that and be part of that story,” said Du Cray.
Cathay Innovation’s entry into growth-stage investing sees it joining players such as B Capital, Naver and Asia Partners. Others like South Korea’s Hanwha Asset Management have tried finding other ways in, partnering with local general partners (GPs) such as Golden Gate Ventures to launch dedicated growth-stage funds to capture the emerging opportunities in this segment.
Last year, Hanwha Asset Management and Golden Gate Ventures said they expected to see 80-110 Series B investment opportunities by 2021 and double the number by 2023, driven by the commensurate growth of early-stage startups backed by the influx of private capital into the region.