Temasek-backed investment firm SeaTown Holdings has raised an additional $200 million for its private credit fund from Asian institutional investors, marking the first time it has secured capital from external investors.
Singapore state investor Temasek was previously the sole limited partner (LP) in the fund. SeaTown is a subsidiary of Seviora Holdings, a newly-formed entity combining Temasek’s four existing asset management companies – Azalea Investment Management, Fullerton Fund Management Company, InnoVen Capital, and SeaTown Holdings International.
The fundraising from external investors brings the total capital committed for SeaTown’s Asia Pacific-focused private credit fund to over $1.2 billion, according to Eddie Ong, deputy chief investment officer of SeaTown Holdings. The new money came from endowments, fund of funds and family offices in markets like Singapore and Malaysia.
SeaTown’s Private Credit Fund issues debt ranging from $30-100 million with flexible loan periods of 1-6 years, depending on risk profile. The sector-agnostic fund targets mature companies which are monetising and generating profits. About 70-80% of its portfolio will be dedicated to the Asia-Pacific region.
SeaTown’s potential targets may include stressed borrowers with intact business models that stand to benefit from pent-up post-COVID demand, or borrowers seeking acquisitive finance.
According to Ong, the fund has so far received deal flow from China, Australia, Vietnam, Indonesia and India across sectors such as real estate, renewables, e-commerce and healthcare. About 50% of the fund has already been deployed. The fund was launched in December 2019 with a 4+2 year fund life and targets a return of 11-14% for its shareholders.
Tapping external investors
Ong, who oversees SeaTown’s private investment portfolio, also manages a separate $1 billion fund targeting private equity (PE) in the Asia Pacific. Similar to SeaTown’s Private Credit Fund, its PE fund will also fundraise from external LPs starting at “a few hundred million” from early 2022 as international borders open and business travel resumes.
“Our focus is to build a solid track record to attract third-party capital globally. We hope to grow this over time and form a strong relationship between SeaTown and these external investors for subsequent funds to come,” said Ong in an interview with DealStreetAsia.
SeaTown’s move to raise external LP money signals a wider shift among Temasek-backed funds that are similarly tapping on third-party capital to grow their assets under management (AUM).
One example is InnoVen Capital, which recently launched geographically-focused venture debt funds in India and Southeast Asia. Both InnoVen funds are in the midst of raising external capital for the first time. Prior to this, InnoVen deployed across India, China and Southeast Asia from a single entity that was backed by Temasek and United Overseas Bank (UOB) in a joint venture.
In 2019, Vertex Holdings tapped on external LPs for its $730 million second Vertex Master Fund (VMF) — the first time it did so since its inception in 1988. Apart from Temasek Holdings, VMF Fund 2 raised capital from Japanese corporates Sumitomo Mitsui Banking Corp, Marubeni, ABeam Consulting, and the Development Bank of Japan. Temasek remained the anchor investor, contributing three-quarters of the corpus.
Earlier this year, Vertex Holdings also announced plans to raise a $330 million (S$450 million) SGD-denominated public corporate bond at the holding level — once again signaling intentions to tap on external capital sources and diversify its LP pool.
Vertex Holdings has ramped up its AUM significantly in recent years, most of it due to a global investor push towards venture capital. In a recent interview at our Asia PE-VC Summit 2021, Vertex Holdings chief executive officer Chua Kee Lock shared that Vertex today oversees over $6 billion in assets across five early-stage funds and one growth fund in the US, China, Israel, Southeast Asia and India.