Cathay Innovation raises $550m for second fund, opens first SE Asia office

Nicolas Du Cray, Partner, Cathay Innovation

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.

Cathay Innovation has already made two investments in Southeast Asia — FinAccel’s $90 million Series C in November 2019, and Igloo’s (formerly Axinan) undisclosed Series A+ round last month.

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.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.