<article>(Editor&#8217;s note: Sistema Asia&#8217;s statement to DealStreetAsia has been added to the story.)</article>

(Editor&#8217;s note: Sistema Asia&#8217;s statement to DealStreetAsia has been added to the story.)
Sistema Asia Capital, the venture arm of Russian private investment firm Sistema PJSFC, has been caught in a liquidity limbo as the firm struggles to find buyers for its Asian portfolio.
According to several sources aware of the development, Sistema Asia Capital placed its India and Southeast Asian venture portfolio on the secondary market after Russia&#8217;s invasion of Ukraine earlier this year. However, it has been met with little to no buyer interest, due to the political implications of being associated with Russia.
This is placing pressure on Russian-linked funds like Sistema Asia Capital to create liquidity for its limited partners (LPs). &#8220;Nobody wants to be seen as giving Russians money now,&#8221; said one source aware of the development.
Sistema Asia Capital has now made recycling capital to LPs its &#8220;top priority&#8221; in the next 18 months, according to a separate close source. Another separate industry source added that Sistema has an extremely slim chance of pulling this through and may have to offer steep discounts of at least 40% on its portfolio before eliciting any form of initial interest.
The Russia-linked fund has also been mired in compliance work since the Ukraine invasion in February this year. &#8220;The time spent on compliance reporting has gone up by 70-75%,&#8221; said a close source, adding that this has hampered the fund&#8217;s ability to function efficiently.
Capital deployment has also been a problem since startup founders have expressed concerns about the implications of receiving Russian money.
Sistema Asia Capital is said to hold assets under management (AUM) of about $150 million across Indian and Southeast Asian startups like Licious, Kissht, Uniphore, and Subtra.
<h3>SG-based CEO Edward Tay quits</h3>
The ongoing gridlock has led to at least one high-level exit at Sistema Asia.
Sistema Asia&#8217;s Singapore-based chief executive officer (CEO) Edward Tay is concluding his two-and-a-half-year stint at Sistema at the end of this month, according to his LinkedIn profile.
Tay has since been listed as a part-time/contract lecturer at various universities such as Singapore Management University (SMU) and United Nations Institute for Training and Research (UNITAR).
Tay, who joined Sistema Asia in 2020, was previously hired to expand Sistema Asia&#8217;s portfolio into Southeast Asia by launching a $120 million second fund. It is not known what progress Sistema made with this fund. Its first venture fund was launched in 2015 and focused on growth-stage Indian startups.
<a href="https://www.dealstreetasia.com/stories/sistema-asia-capital-201673">According to an earlier DealStreetAsia interview,</a> Sistema Asia raised nearly 20% for its Fund 1 from high net-worth individuals (HNWIs) in India, while the remaining came from the parent Sistema PJSFC.
Sistema Asia Capital is a Registered Fund Management Company licensed with the Monetary Authority of Singapore (MAS).
Sistema PJSFC, which grew its vast wealth from telecom and retail, is one of Russia&#8217;s largest private investors with assets across Europe, US, India and the Russian-speaking world. It started investing in India in 2008 and was the first Russian private-sector conglomerate to invest in India&#8217;s telecom sector. Sistema oversees 1.8 trillion Russian roubles in assets, according to its website.
DealStreetAsia has reached out to Edward Tay for comment.
A Sistema Asia spokesperson has provided the following response to DealStreetAsia:
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1.     While there were discussions on secondary sales there was significant interest and never at 40% discount. Discount ranges were 25-30% which are normal liquidity discounts on secondaries. The decision was made not to sell.
2.     Article claims 70-75% increase in compliance work. There has been no increase in compliance work. It is business as usual in terms of compliance and reporting
3.     The fund is fully deployed in terms of dry powder since 2021 and is currently drawing management fees. The fact that we are facing problems deploying is incorrect.
4.     The fact that the fund is 20% Indian HNI’s and balance Sistema is factually incorrect. The Indian HNIs are 7% of the Fund and apart from Sistema we have European and Middle East LPs on the fund’s cap table.
</div>
</blockquote>

"Nobody wants to be seen as giving Russians money now."

(Updated) Russia-linked Sistema Asia Capital struggles to sell portfolio; CEO quits

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(Updated) Russia-linked Sistema Asia Capital struggles to sell portfolio; CEO quits

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