Malaysia’s Genting Group is looking to ramp up its investment activity through its corporate venture capital (CVC) arm at a time when its leisure and hospitality division is reeling owing to the COVID-19 crisis.
Set up in 2020, Genting Ventures, which is headquartered in Singapore, has invested in a slew of tech startups engaged in casino analytics, e-sports, and restaurant solutions.
Genting Ventures' portfolio
|Gaming Analytics||AI/software||US-based software solutions for casino operators|
|Play Studio||games||US-based game developer|
|Sightline||payment system||US-based digital, cashless payment system for gaming and entertainment operators|
|Tabsquare||F&B||Singapore-based in-restaurant technology solutions including centralised ordering platform|
|Hoolah||fintech/retail||Singapore-based buy now pay later firm|
|ESPL||e-sports||Singapore-based esports tournament organiser|
|Evos||e-sports||Indonesia-based esports membership operator|
|Bukalapak||e-commerce||Indonesia-based e-commerce unicorn|
|Source: Genting Ventures' website|
The idea of the venture was sown in 2018, but the firm obtained a fund management licence from the Monetary Authority of Singapore (MAS) only last year, its head of investment Josie Lai told DealStreetAsia in an interview.
The size of the fund is currently S$50 million ($37.6 million) but is expected to grow as the venture arm develops.
“For now, I think there isn’t really a hard cap [on the fund size]. We set up a structure that allows us to set up sub-funds, different sub-funds. With a fund management licence, [we are] allowing it to raise external capital while Genting will be the anchor investor,” Lai said.
“This fund structure gives us flexibility. We definitely have the vision to continue to build our reputation in the corporate venture world and it also helps Genting to stay ahead of the curve of technology innovation.”
To say 2020 was challenging for Genting Group could be an understatement, given its vast exposure in tourism and hospitality businesses spanning from casinos, theme parks, hotels to cruises across Asia, Europe, and the US. 2021 is likely to be as difficult for its core businesses, as the pandemic continues to loom large on the sector.
Founded in 1965, Genting Group’s businesses comprise Genting Bhd, the holding company, Genting Malaysia Bhd, Genting Plantations Bhd, which are listed in Malaysia, and Singapore-listed Genting Singapore Ltd.
Apart from leisure and hospitality, palm oil plantations, power generation, and oil and gas, Genting Group is also engaged in property development, life sciences, and biotechnology activities, with operations spanning across the globe, including Malaysia, Singapore, Indonesia, India, China, the US, Bahamas, and the United Kingdom.
Genting Bhd, the holding company, plunged into red with a net loss of 2.1 billion ringgit ($508.57 million) in 2020, compared to a net profit of 3.7 billion ringgit ($896.06 million) in 2019. Its total revenue fell 47% to 11.6 billion ringgit ($2.81 billion) last year.
While the company, in its latest annual report, attributed the loss to its hospitality division, its subsidiary Genting Energy, which has power plants in China, India, Indonesia, also posted lower revenue and earnings.
However, Genting Plantations posted higher revenue and earnings in 2020, mainly due to stronger palm product prices.
Genting’s CVC strategy
So far, Genting Ventures has raised capital from a subsidiary of Genting Bhd and has deployed about $25-30 million from the corpus.
“The intention is to get other companies under the group to also participate. But the pandemic has impacted Genting’s corporate business. So, we might not be able to get all of these affiliate companies to participate as they may have other things to take care of, that are more urgent.”
Typically, a fund takes 12-18 months to close. “When the situation gets better, we can go back to the affiliated companies and get money into the first fund,” Lai said, adding that Genting Ventures can even start a second fund, or a sub-fund if it raises capital.
Currently, Genting Ventures is busy setting up its internal processes and putting its team in place as it carves out a strategy to invest in early growth-stage startups that are disrupting technologies synergistic to the group’s core businesses.
It has invested in companies in the US and is currently scouting for opportunities globally.
Similar to other CVCs, Genting Ventures was set up to ‘future-proof’ its existing business and help the group stay ahead of technology innovation.
“Our businesses are traditional ….using the venture arm, we help the group to see what’s going on. Is there anything that could be disrupting? We want to invest in a startup, provided it’s relevant to the Genting business,” she said, citing the example of eSports, in which Genting Ventures is an investor.
“eSports is something that has both online and offline components because you can play eSports tournaments online, and you can also host it offline?” she said.
“Earlier, people used to go to casinos to gamble. But the newer generations may not want to go there. They may like to play games and win some money from tournaments. So, we need to understand what’s going on with the new generation.”
Flexible to invest in other sectors
Besides gaming and entertainment, leisure and hospitality, agriculture, oil & gas and energy which are categorised as its synergetic areas, Genting Ventures is also open to food tech, agritech, eSports and social commerce.
“Those are some of the sectors we’re exploring to see what is relevant to us,” said Lai.
Genting Ventures typically invests in startups in their pre-Series A -Series B rounds, with ticket sizes ranging from $1-2 million.
“We’ve done deals that are smaller than that. We also have done deals that are much larger than that. Most of the time, we are investing in between pre-A and Series B rounds. But there are times that we are a bit opportunistic. So, we’ll look at certain companies that are close to exit,” Lai said.
Last month, Genting Bhd’s subsidiary Resorts World Inc made headlines when it joined Indonesian unicorn Bukalapak’s latest funding round.
Going forward, Genting Ventures is open to investing in startups alongside institutional VCs – this is even as the firm mostly makes direct investments. “We like to co-invest with other VCs. So, in a lot of the deals so far, we have let VCs, institutional VCs lead,” said Lai.
When asked if Genting Ventures will invite other companies to invest in its fund, Lai said it will focus on having a good track record first.