Southeast Asia and India-focused private equity (PE) firm Creador Capital Group, which focuses on B2C businesses targeting a broad base of consumers, considers business services, which includes payment processing, as the next big sector.
Creador, one of the most active PE firms in Southeast Asia and India, closed its third fund this year and has already backed 4-5 companies, including Paras Healthcare recently. It has also made a couple of exits.
In a conversation with DEALSTREETASIA, Brahmal Vasudevan, founder and CEO at Creador, talks about investment strategy, interests and fundraising.
How was H1 2017 for Creador?
Creador had an exciting H1 2017 where we executed several strong exits. Somany Ceramics generated a return of 5.3x and an IRR of 77 per cent in INR terms, GHL Systems generated a return of 2.8x and an IRR of 40 per cent in MYR terms.
What are the new sectors you are looking to invest in from the fund? Any new sector which you have not invested in yet?
We look at businesses that sell from one to many, B2C businesses that are targeting a broad base of consumers. In particular we are looking at financial services, branded products, retail, healthcare and media, which are reflective of the kinds of investments we would be doing.
The next sector would be business services and within that there are many sub-sectors that would include payment processing, such as GHL Systems. We look for the best opportunities within these sectors.
How many potential deals are in your pipeline region-wise? How many more deals in India can we expect to see from the new fund?
We remain optimistic about our markets and our pipeline remains robust across each market. We may invest into 2-3 companies in India.
With the new fund Creador III, is there any change in investment size or stage?
Our focus has been on growth equity and average investment sizes would be relatively higher compared to our earlier funds.
How much have you deployed from the latest fund?
We have deployed around a third of the fund capital.
Creador has invested in several financial companies such as City Union, Repco finance and BFI. What is your view on this sector?
The financial services sector is a key sector where we have seen many interesting growth opportunities across both India and Indonesia. There remains strong growth within this sector and this was also reflected in a recent exit in Cholamandalam Investment & Finance Company Ltd where this generated a 5.0x and an IRR of 49 per cent in INR terms.
Are there any planned exits from your portfolio in India or any other region?
We do not discuss planned exits but will announce an exit when able.
The firm has already made two exits – GHL System Berhad and City Union bank? Was there any particular reason to exit City Union so early?
The GHL Systems investment has been for around four years and there was a good opportunity to exit to Actis, who were looking to expand their portfolio within the region. The City Union Bank exit was where we saw strong global liquidity targeting emerging markets making valuations buoyant providing an attractive window of opportunity to realize a 62 per cent IRR.
What would you like to say about the three key markets you invest in – India, Malaysia and Indonesia – in terms of investments, returns, performance etc?
Each market has characteristics that differ and this is where we have strong local teams to navigate respective markets in order to seek the best growth opportunities.
Are there any plans to raise a new fund?
We are currently deploying from our latest fund, Creador III, which is a July 2015 vintage. We plan to raise a new fund around mid 2018.