Credera Group, currently raising a $100 million private equity fund focused on Myanmar, is betting on strategic greenfield ventures in finance, manufacturing and other consumer spaces to forge new deals in the country.
The PE firm is in advanced talks with stakeholders in these identified areas, said Gaurav Manghnani, CEO, Credera Group. “We remain committed (to Myanmar), We have been working on these deals and a lot of them are getting closer to fruition,” he added, speaking to DEALSTREETASIA on the sidelines of the Asia PE-VC Summit 2017.
As a pre-consumer market, Myanmar is still in the process of building its infrastructure. It is, therefore, a challenge for investment firms to find promising startups that need growth capital or are ready to be acquired.
Credera sees the gap in the SME lending space in Myanmar as a big opportunity. Despite over 250 microfinance institutions and banks, SMEs in the country often find it difficult to secure loans to further their growth.
“We are getting very close to putting together our NBFC deal structure,” said Manghnani. The PE firm is in the process of teaming up with an Indian NBFC as a strategic partner to co-invest and set up an equipment finance venture in Myanmar.
“We will shortly be applying to the central bank for the necessary permissions,” he said.
Potential for import substitution
Credera Group also finds the area of import substitution in Myanmar having “infinite potential.”
“I think the most lucrative investments and the biggest need for Myanmar first is import substitution,” Manghnani said. The firm has undergone advanced discussions with the leadership in Karen state and is looking forward to potentially set up a sugar factory in the region.
It has also been evaluating possible investments in the cement manufacturing sector but a decision could take more time due to the slowdown in construction related work across the country.
“However, we continue to look for an attractive location for our cement investment and we will work in that direction,” said Manghnani.
For its manufacturing plans, Credera is roping in strategic partners from the ASEAN region to provide operational expertise.
Education and healthcare other lucrative opportunities
Education and healthcare are two other spaces of high interest to Credera Group.
The PE firm has looked into a couple of deals in the higher education space and is likely to expand its venture with a young professional team of entrepreneurs of Myanmar.
In the healthcare space, Manghnani said Credera is more interested in niche services than hospitals. As a financial investor, the PE firm is searching for a potential local partner as well as operating partner that understands the dynamics of Myanmar.
“In almost 100 percent of the cases, we will bring in the best operating partners (from the region) to co-invest with us,” said Manghnani.