Editor's take: The week that was — March 11-16

Editor's take: The week that was — March 11-16

Southeast Asian startups did not see any letup in the subdued funding environment in February, as total funding remained suppressed at $388 million, according to proprietary data collated by DealStreetAsia.

The amount raised from 63 transactions last month represents a 56% increase from January when privately held companies raised $246 million from 61 deals. However, it was still far below the psychologically important $1 billion mark.

The subdued funding last month continued to underscore a cooling off in investor sentiment, indicated by an unwillingness to sign large cheques. The largest funding raised in February was $45 million by Singapore-based refrigerated truck startup SingAuto in its Series A funding round anchored by an unnamed investor based in the UAE. In January, the region also failed to witness any transaction above $100 million.

Let’s take a look at the other major headlines from this week.

Deal news

Wall Street’s marquee investment firm Apollo Global Management is in talks to take over Asian mid-market performing credit platform BPEA Credit, which is currently in the market to raise its inaugural India-Southeast Asia fund with a target corpus of $750 million.

Indonesia-listed investment firm PT Saratoga Sedaya Investama Tbk (Saratoga) is likely to acquire a majority stake in Brawijaya Hospital & Clinic from private equity firm Falcon House Partners.

Y Combinator-backed Shiok Meats is seeking a merger with Umami Bioworks, another cultivated seafood startup based in Singapore. Umami chief executive Mihir Pershad will take over as CEO of the newly merged entity, while Shiok Meats founder and CEO Sandhya Sriram will leave the company to take a break.

Jakarta-based AwanTunai, a fintech startup that offers a point-of-sale financing solution to digitise Indonesia’s vast cash economy, has closed its Series B round at $27.5 million. The lead investors in the round include Norfund, Japan’s MUFG Innovation Partners and Finnish impact fund OP FinnFund.

Malaysia-based B2B wholesale marketplace startup Borong is raising a Series B funding round with a minimum target of $10 million. The firm is raising funds primarily to drive expansion into new countries in Southeast Asia, Borong co-founder and chief executive officer Lennise Ng told DealStreetAsia.

In yet another sign of growing consolidation in the logistics tech space, Jakarta-based trucking company Kargo Technologies is understood to have entered into a strategic partnership with Malaysia-based logistics platform The Lorry. The discussions are ongoing for a potential M&A deal.

Perfios, an Indian fintech startup that collects data to help financial institutions make lending decisions, has raised $80 million from Teachers’ Venture Growth (TVG), the late-stage venture and growth investment arm of Ontario Teachers’ Pension Plan, in a new funding round that paved its entry into the unicorn club.

Hinduja Tech, a mobility-focused global engineering R&D services company and a subsidiary of India’s Ashok Leyland, is raising $50 million in funding from Creador. The company, which has garnered a post-money valuation of $255 million, is divesting a 19.6% stake to garner the funding.

Dutch development bank FMO has proposed to invest another $25 million in Delhi-based microfinance company Satya MicroCapital Limited. FMO had invested $25 million in the microfinance company in 2022.

Hong Kong-listed real estate group ESR has agreed to sell its ARA Private Funds (APF) business to entities that include an affiliate of Sumitomo Mitsui Finance and Leasing Co at an enterprise value of $270 million. In total, 22 funds are being divested as part of this transaction, representing $9.8 billion in total AUM.

From the LP-GP quarters

In The LP View this week, we explore the trend of separately managed accounts (SMAs), referred to as “funds-of-one”, which are expected to get a leg up in APAC as investors seek to safeguard their investments in an increasingly complicated environment. Unlike commingled funds, SMAs are created by managers to invest on behalf of a single limited partner (LP).

We also examined how more and more institutional investors in Southeast Asia are adding a climate-focused component to their portfolios. And, mid-market private equity firms are reassessing their investment strategies to attract this capital pool as they see an opportunity to play a significant part in the decarbonisation journey of small and medium enterprises.

While investing in sustainability, climate, and social causes may be catching on, Asia still doesn’t have enough local impact investors in the ecosystem, according to US International Development Finance Corporation (DFC) managing director Geoffrey Tan. DFC is a major institutional impact investor and a key limited partner in several Asian PE and VC funds.

World Bank Group member IFC is considering an equity investment of $15 million in venture capital firm Endiya Partners’s third fund, which is eyeing a corpus of $100-125 million.

Cathay Life Insurance is offloading stakes worth $1.2 billion across 21 private funds to global private markets investor HarbourVest Partners. The Taiwanese insurer said it is anticipating an approximate profit of $270 million from the secondaries deal.

Interviews and analysis

Since US tech valuations came off their frothy highs in 2021, venture capitalists around the world have had a lot to ponder about. “This is a hard business,” Harish Kumar, partner at Singapore-based venture capital firm Leo Capital, said, acknowledging how the last few years have been challenging for everyone. Convincing LPs about the potential of emerging markets is far more difficult during the trough seasons. It’s simply more difficult to make money in these places, he added.

Amir Farha, who started raising COTU Ventures’s debut fund in May 2021 and closed the vehicle only two years later in May 2023, shared a similar experience. “It was probably the hardest thing I’ve ever done,” said the Dubai-based firm’s founding general partner. Before starting COTU Ventures, Farha spent roughly 10 years building his previous VC firm, BECO Capital, and has invested in well-known Middle East startups like Careem, Fresha and Property Finder.

Amid India’s growing wanderlust, startups revolutionising luggage bags with new designs and tech features are finding their place in the sun. Investors, seeing big potential in this growing market, are taking notice. We dig deeper to find out what is driving the trend and inflow of venture dollars into a segment that has evolved from a mere commodity into a fashion accessory.

As part of our Female Founders in Southeast Asia 2023 and Female Founders in India 2023 reports released on International Women’s Day, we showcased the entrepreneurial journeys of several women leaders in the region. This week, we featured the stories of Vivien Le, the co-founder and chief executive of Vietnamese insurtech startup Saladin; Jessica de Mesa, co-founder of Philippines-based femtech startup Kindred; Kanika Gupta Shori, co-founder and COO of Square Yards; Rachana Gupta, co-founder of Gynoveda; Rithika Agnishwar, co-founder of Garuda Aerospace; Belinda Luis, co-founder of Genexyz; and Ramya Venkataraman, founder & CEO of Centre for Teacher Accreditation (CENTA).

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