Mid-market private equity funds, many of whom first set up shop in Southeast Asia nearly 10 years ago, are busy drawing up monetisation strategies as they seek exits from their investments.
Consider this: Creador is said to be planning an exit from Malaysian home improvement retailer Mr. D.I.Y through an IPO on the local stock exchange. Affirma Capital, which spun out from former Standard Chartered Private Equity, is looking to exit from Vietnam’s agribusiness group Loc Troi. And, Vietnamese PE firm VI Group is seeking to sell its interest in Wellspring International School. Furthermore, global private equity firm CVC Capital Partners is preparing an exit from Indonesia’s sanitary napkin and baby diaper maker Softex, likely through an IPO in Jakarta.
At the same time, mid-market PE firms are continuing to raise funds – likely a good benchmark of how successful the particular GPs have been.
For instance, Quadria Capital, the healthcare-focused PE firm has started to raise its Fund II in August 2018, with a target of $400 million. The fund had its first close, at $194 million, in March 2019. Creador has secured $565 million for its fourth fund in July 2019. Also in 2019, Northstar Group is understood to have launched its fifth fund – Northstar Equity Partners V- with a target of around $800 million to $900 million. On the other hand, the Malaysia-based Navis Capital is also said to be raising around $1.75 billion for its eighth fund.
Even as several firms hit the fundraising trail to capture the Asian growth story, the exit record of private equity firms from previous investments will be something institutional investors will be keenly watching out for. The exit landscape continues to be challenging amid broad economic uncertainty, market volatility, and possibly mismatched expectations. We have put together a selection of exit transactions to expect across Southeast Asian markets in the coming year:-
Singapore: KKR eyes sale of Goodpack for $2b
Global PE firm KKR & Co is said to be exploring a potential sale of Goodpack Ltd for at least $2 billion.
This was first reported in June around the time when Blackstone Group paid nearly $19 billion to acquire US logistics assets from Singapore’s Global Logistic Properties, which was in 2017 delisted from the stock exchange in a $16-billion buyout by Chinese consortium comprising Hopu Investment Management, Hillhouse Capital Group, Vanke Group and Bank of China.
In 2014, KKR paid $1.1 billion to privatise Goodpack, then the world’s largest maker of intermediate bulk containers, from the Singapore Exchange, amid growing interest in logistics assets as a proxy to the boom in global commerce and consumption. Goodpack counts regional offices in 22 countries and operational depots in 31 countries across six continents.
Singapore advisory firm Rippledot is believed to be involved in the deal, which started around the end of October or early November, according to people familiar with the matter. Goodpack is said to have attracted interest from industry rivals, as well as other buyout firms.
Myanmar: PE investors seek to sell Irrawaddy Green Tower stake
Two private equity investors in Myanmar’s telco tower company Irrawaddy Green Towers (IGT) are said to be seeking a complete exit, as reported by DealStreetAsia in June 2019. The investors are Dubai-based Blue Stone Management and Lebanon-based investment firm M1 Group. They own IGT through a Singapore-based holding company Irrawaddy Tower Asset Holdings (ITAH).
The official stake sale process is believed to have started in November 2019. The PE investors have hired Standard Chartered Bank and UBS on the sell-side. Investors are likely looking to monetise their stakes as Myanmar’s telco tower sector is ripe for consolidation.
Vietnam: Affirma Capital to exit Vietnam’s Loc Troi
Affirma Capital, formerly part of Standard Chartered Private Equity (SCPE), is understood to be putting its remaining indirect minority stake in Vietnamese agribusiness Loc Troi Group up for sale. DealStreetAsia has reported that Credit Suisse and Rothschild are advising on the process.
In 2014, SCPE acquired a 34 per cent stake in Loc Troi for more than $90 million, from a consortium led by Vietnam-based asset management firm VinaCapital. In 2016, the PE unit transferred approximately 17 million shares of Loc Troi to its fund called Marina Viet Pte Ltd to own only around 25.2 per cent of the Vietnamese company. SCPE in July 2019 reportedly sold 8.2 percent of Loc Troi for 153 billion dong ($6.6 million).
Indonesia: CVC prepares to list Indonesia’s Softex
Global PE firm CVC Capital Partners has been preparing a listing plan for Softex Indonesia, a maker of sanitary napkins and baby diapers. The initial public offering on the Indonesia Stock Exchange (IDX) is expected to take place in the first quarter of 2020, as reported by DealStreetAsia.
In June 2019, Softex Indonesia officially mandated Citigroup, UBS, Credit Suisse, and Mandiri Sekuritas as IPO underwriters, which is expected to raise around $500 million.
However, CVC Capital may not be selling off its entire stake in the company. CVC Capital first announced its investment in Softex Indonesia in December 2015, although no other terms including the stake size and value of the deal, were disclosed. But the PE firm is understood to own a significant minority stake, said to be over 30 per cent, in the firm.
Malaysia: Creador’s exit plan through Mr. D.I.Y IPO
Creador, the mid-market PE firm, is exploring an exit from Malaysia’s home improvement retailer Mr. D.I.Y through an IPO on Bursa Malaysia, as reported by DealStreetAsia. Mr. D.I.Y. is set to only list its domestic and Brunei operations and is reportedly seeking a valuation of 10 billion ringgit ($2.4 billion).
The initial plan was to list in November 2019, but the market debut has been deferred to the first half of 2020 at the earliest. Founded in 2005, Mr. D.I.Y. runs around 600 stores across Malaysia, Thailand, Indonesia and Brunei.
In late 2018, it opened its first store in Singapore and the Philippines.