Heliconia Capital, Yangzijiang launch $109m PE fund targeting SMEs in SE Asia

Heliconia Capital, Yangzijiang launch $109m PE fund targeting SMEs in SE Asia

Photo: Colin Watts / Unsplash

Singapore-listed Yangzijiang Financial has teamed up with Temasek-backed Heliconia Capital to launch a S$150-million ($109 million) new fund that will invest in small and medium-sized enterprises (SMEs) in Singapore and Southeast Asia.

The newly-launched private equity fund, Heliconia Generation Fund Limited Partnership, will co-invest alongside the other fund managed by Heliconia with a focus on promising SMEs in Singapore and Vietnam.

Heliconia has a track record as an active investor in Singapore, and portfolio companies include Carousell, CSE Global, Eagle Eye Centre, Fagerdala, Heptagon, Jumbo Group, Nanofilm, One Championship, Secretlab, and Razer.

In the last few years, Heliconia has also expanded to other Southeast Asian countries with investments in Vietnam and Indonesia.

Yangzijiang will contribute S$80 million ($58 million) to the fund as the vehicle’s anchor limited partner. Investments may be structured in the form of equity, debt, and/or hybrid debt-equity structures.

As the anchor limited partner of the fund, Yangzijiang Financial will have one representative in the fund’s investment committee. It will also explore co-investment opportunities alongside the new vehicle, according to the announcement.

Some criteria used in identifying its investments include a strong market position, sustainable competitive advantage, competent management, and the potential to be a significant player regionally or globally, Yangzijiang said in an announcement.

“SMEs form the critical pillar of the economic system of every country in Southeast Asia. With the Fund focused on investing in promising small and medium businesses in the region, there is a plethora of growth opportunities that we can target,” said Yangzijiang CEO and CIO Vincent Toe.

There are at least 71 million MSMEs in Southeast Asia, based on 2020 data from the Asian Development Bank. They account for 97% of all businesses in the region and employ 67% of the working population.

Heliconia Capital CEO Derek Lau said the partnership with Yangzijiang is in line with the firm’s overall co-investment objective.

Heliconia Capital is a wholly-owned subsidiary of Temasek Holdings. It focuses on growth-oriented companies and manages several funds, including growth equity, mezzanine capital, buyout, and fund of funds.

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