Greater Mekong-focused private equity firm Belt Road Capital Management (BRCM) is looking to deploy its $50-million debut fund, Belt Road Investment Group, across 10 companies, a top executive at the firm told this portal.
Out of Belt Road Investment Group, BRCM has so far announced three investments since January 2018 and has just completed its fourth deal, which remains undisclosed, in the technology sector.
Belt Road Capital’s primary investment focus is on the Greater Mekong Sub-Region, including Cambodia, Myanmar, Lao PDR, Thailand and Vietnam. The region, bound together by the Mekong River, covers a combined population of 326 million people and a GDP growth of 8.5%, making it one of the fastest growing regions in the world.
The firm typically invests between $2 million and $7 million in each deal. “We are on pace to have around 5 to 6 deals completed in 2018,” Alex Odom, chief investment officer, BRCM, told DEALSTREETASIA.
While the fund is region-focused, it invests across all sectors with a bias towards technology-enabled platforms.
Established in late 2017, BRCM made its first investment of $1.8 million in Digital Classifieds Group (DCG), the parent company behind Realestate.com.kh, a property portal and market agency. DCG also operates general classifieds and real estate portals in Laos, Papua New Guinea and Fiji.
“We look for companies with strong leadership teams and 2 to 3 years or more of operating history,” said Odom.
Three months after its first investment, BRCM forayed into another frontier market, Myanmar, a country which saw a mobile revolution in the telecommunication starting from 2014.
BRCM made a $7-million investment in Oway Group, taking part in the total $14.7 million funding round together with other investors Daiwa PI Partners Co Ltd and the International Finance Corporation (IFC), a member of the World Bank Group.
Myanmar‘s diffusion rate of Internet usage is at about 20 per cent in 2016, which is still low compared to Vietnam’s 50 per cent. This means tapping into a country with plenty of room for growth in the Internet market.
Oway Group is expanding its tourism business and also has an app-based three-wheeler motor bike operation in Mandalay, the second largest city in Myanmar.
In June 2018, BRCM invested $4 million in Phnom Penh-based Unnitel, a next-generation data and mobility solution provider, which operates as WeRocket.
“There is of course still a lot of risks when associated with investing in frontier markets, but we believe the reward well compensates that risk at this point in time,” said Odom.
BRCM emphasizes the importance of having “viable and strong growth plans, typically operating in sectors with proven business models that have already reached maturity in more developed markets,” he said.
The firm’s typical investment preference is in the Series A or Series B round with minority stake holding.
“We are active investors, and usually, take representation on the Board of Directors,” said Odom.
The investor base of BRCM is predominantly Asia-Pacific high net-worth investors keen to tap opportunities in the CLMV region.
Some PE firms present in the CLMVT countries include Mekong Capital from Vietnam, Lakeshore Capital, Lombard, Malaysia’s Navis Capital, North Haven Thai Private Equity, managed by Morgan Stanley Private Equity Asia Inc, Delta Capital, Anthem Asia and Emerging Markets Investment Advisors.
“Our team has extensive experience on the ground in the Mekong Region, which gives Belt Road unique access to opportunities that investors based in Singapore or Hong Kong may not be able to find,” said Odom.