It is Sunday, and we are back again with our selection of exclusives, interviews and deal scoops from the week.
Let’s start with some LP perspectives first.
Global investment manager Adams Street Partners has actively invested in the first half of this year even as the COVID-19 crisis shook markets and prompted investors to tighten their purse strings.
“We increased our exposure to some of the managers that we really like, or when some LPs gave up their allocation, we were able to access some of the managers we wanted to,” Andy Wang, partner, primary investments at Adams Street Partners told us in an interview.
Limited partners could shift their focus to secondary and distressed debt investments in the coming two years, as the coronavirus pandemic has created opportunities in these areas. The market is in “an early stage of prolonged distress, which is a debt-buying period for heavily-hit industries like travel, hospitality, energy, and also for some moderately-hit ones like servicing and manufacturing,” said Brenda Lau, Head of Asset Management Asia at Indosuez Wealth Management in an interview.
The aftermarket performance of portfolio firms is increasingly being taken by LPs as an important benchmark to assess their venture capital and private equity backers in an over-heated public market, according to an Asia-focused investor. “In the past couple of weeks, we have seen some much-needed correction in global public market sentiment, which has removed some froth from certain overheated pockets,” said Gong Jie, a Hong Kong-based partner at investment firm Pantheon Ventures.
The Canada Pension Plan Investment Board (CPPIB) continues to see exciting opportunities in Asia, its second-biggest market, particularly in the technology and healthcare sectors. In an interview with CNBC, CPPIB CEO and president Mark Machin said there are interesting opportunities in China and India on both the equity and credit side of the business. Machin stressed that while digitisation has become massive for the pension fund globally as COVID-19 has forced people to stay at home, the adoption pattern is particularly interesting in this part of the world.
US pension fund California State Teachers’ Retirement System (CalSTRS) committed a total of $4.8 billion to private equity managers in the first half this year, including $3.2 billion during the second quarter. About 70 per cent of the total commitments went to buyouts or buyout-related co-investments. During the period, the pension fund completed a $100-million investment in CVC Capital Partners’s fifth Asia Pacific fund, which closed in April at its hard cap of $4.5 billion.
On the fundraising trail
8i Ventures, an Indian early-stage VC firm, is in the process of raising $50 million for its second fund to invest in consumer and fintech sectors across the country. 8i Ventures had a corpus of $15 million for its first fund. It has backed companies such as Blue Tokai Coffee, and card issuing platform M2P, among others.
Australia-headquartered workplace collaboration software firm Atlassian has announced the launch of a $50-million venture fund to support companies building apps for its cloud products such as Jira, Confluence, Bitbucket and Trello.
Cambodia-based venture capital firm OBOR Management is on track to raise $30 million for its evergreen SME fund that focuses on frontier markets.
Impact investor Patamar Capital has launched a $50-million fund for female entrepreneurs in Southeast Asia’s emerging markets.
State-owned China Resources Group’s investment vehicle CR Capital has partnered tech giant Tencent‘s digital health service unit and three Chengdu local government groups to launch a 1 billion yuan ($147 million) healthcare fund.
Chinese private equity fund manager Yuexiu Industrial Fund has invested in a mergers and acquisitions (M&A) fund launched by Firstred Capital, bringing the total capital so far raised by the vehicle to 6 billion yuan ($885 million).
Chinese property development and investment firm CIFI Holdings has entered into an agreement with Singapore’s sovereign wealth fund GIC to launch a 7 billion yuan ($1.025 billion) investment platform for residential projects in eastern China’s Yangtze River Delta.
Northern Light Venture Capital, a China-focused venture capital firm, is seeking to gather up to $375 million for a new VC fund. The target for the latest fund is lower than the $445 million its predecessor raised in March 2019.
Private equity firm Hillhouse Capital Group is raising a fund targeting over 20 billion yuan ($3 billion) to tap into opportunities arising from the Chinese economy’s return to normalcy. Hillhouse formally began fundraising for its largest-ever RMB fund in recent months.
Australia-listed car marketplace iCar Asia is in preliminary talks to find a buyer, we have learnt. During the first half of this year, iCar incurred a net loss of A$6.1 million, up from A$5.6 million in the previous year, according to its filings with the Australian stock exchange.
Indonesia’s Gojek is understood to have acquired a majority stake in Vietnam-based payments startup WePay Payment Services Co Ltd to secure the licence it needs to operate an e-wallet in the country.
Asia-focused private equity firm PAG will invest up to 840 billion yen ($8 billion) in Japanese real estate over the next four years, Nikkei has reported. The investment specialist expects companies to sell off properties, along with financial institutions eager to shed bad debt, due to the coronavirus pandemic.
Indian chemicals manufacturer Deccan Fine Chemicals is set to buy out Nasdaq-listed Flex‘s 75 per cent stake in Escientia Life Sciences, a US-based pharmaceutical development and manufacturing firm, for under $50 million.
Indian cashback and coupons site CashKaro has raised $10 million in a Series B funding round led by Korea Investment Partners (KIP) and existing investor Kalaari Capital.
Mumbai-based Dream Sports, the owner of fantasy sports platform Dream11, has raised $225 million in a funding round led by New York investment firm Tiger Global Management, TPG Tech Adjacencies, ChrysCapital, and Footpath Ventures.
A consortium led by Naver Corp has invested $80 million in Carousell in a deal valuing the online classifieds player at over $900 million. Other investors in the consortium were Mirae Asset-Naver Asia Growth Fund and NH Investment & Securities.
Dutch development bank FMO has proposed a $7.5 million investment in BRAC Myanmar Microfinance Company Limited, a Myanmar-based for-profit institution.
The case for SE Asia
As it expands its investments in Southeast Asia, Prosus Ventures is looking to tap into “tech-enabled” startups to capitalise on the potential presented by the region’s emerging middle class, the firm’s chief Martin Tschopp told DealStreetAsia this week. Prosus Ventures is a unit of Amsterdam-listed internet company Prosus, which, in turn, is controlled by Naspers.
Lightspeed Venture Partners is officially open for business in Southeast Asia. The Silicon Valley-based venture capital firm last week announced the opening of its first regional office in Singapore — a move first reported by DealStreetAsia in February. Lightspeed joins the likes of Vulcan Capital and MassMutual Ventures, both US-based venture firms that set up Southeast Asia offices in Singapore in the last year.
Venture capital firm Gobi Partners is bullish on Malaysia’s tech ecosystem and is ready to deploy 100 million ringgit ($24 million) in the country in the next two to three years, its chairman and founding partner said. “We think Malaysia has one of the best tech ecosystems in the entire Southeast Asian region,” Thomas Tsao told reporters at an event.
Analysis & Features
Indonesia’s online fashion startups appear to be down on their luck. Of the 24 e-commerce ventures that closed down or merged in the country since 2013, about 17 were young fashion-focused ventures, according to data compiled by DealStreetAsia. Most recent among them are Blanja.com — a joint venture between the Indonesian telecommunication giant Telkom and e-Bay, which shut shop on 1 September — and Openspace Ventures-backed Sorabel, which ceased operations in July.
Meanwhile, Malaysian venture capital firm RHL Ventures is scouting for investment opportunities in sectors beyond technology. It is now eyeing deals in non-tech sectors such as health and wellness. “Especially in these times of COVID, we are paying more focus on healthy living and therefore have looked at it more from a wellness and prevention standpoint,” said RHL managing partner Rachel Lau.
Artificial intelligence-enabled robots could soon harvest palm fruit, cocoa and rubber in Malaysia’s labour-intensive plantation farming sector. We wrote about Petronas Ventures-backed smart farming startup Braintree Technologies, which is targeting to deploy these robots as early as March next year. Braintree counts large plantation owners including Bursa Malaysia-listed Sime Darby Plantation Bhd and FGV Holdings Bhd among its top clients.
Finally, I leave you with an analytical piece on what that rumoured $3-billion cheque from Alibaba for Grab could mean for both the companies. Over the last two years, the Southeast Asian ride-hailing giant has taken a leaf out of the Chinese unicorn playbook to transform itself into a super app for the region. We will have to see how this plays out for the Chinese giant’s SE Asia strategy.