Editor's take: The week that was — May 16-21

With global stock indices teetering into bear market territory, how has the private capital universe been faring?

A major development this week was Zilingo’s termination of co-founder and CEO Ankiti Bose, following her suspension nearly two months ago. The prospects of the Singapore-based fashion retail tech startup are arguably now in doubt since the turmoil at the company became public.

Amid the market volatility, it is financial reporting season for companies that have gone public.

Nasdaq-listed Grab reported its financial results for the January-March quarter, which showed a narrowing of losses as it eliminated interest charges on its redeemable preference shares after they were converted to ordinary shares. The company reported a 6% rise in revenue on the back of higher food and delivery, and ride-hailing activities.

Grab’s current market capitalisation of about $12.3 billion is about one-fourth of what it was at its listing.

Sea Ltd, listed on the New York Stock Exchange, posted deeper losses for the first quarter ended March, as operating expenses rose significantly. This analysis by our consulting editor Angus Mackintosh looks beyond the headline numbers at Southeast Asia’s biggest public tech company.

Shares in Sea surged 14% after the results, but its current market capitalisation of about $44.6 billion is still a far cry from its Aug 2021 peak.

Raising capital

GoTo, which listed on the Indonesian Stock Exchange a month ago, is now looking to raise fresh capital via a private placement amounting to roughly 10% of the company. GoTo, backed by some of the world’s biggest investors, raised $1.1 billion at a $27.8 billion valuation in its IPO.

Indonesian digital payments platform Xendit this week announced raising $300 million in a Series D round from investors including Coatue Management and Insight Partners, confirming a DealStreetAsia report in February.

Coins.ph raised a $30 million Series C round led by Ribbit Capital and a number of unnamed strategic investors.

In India, beauty startups are seeing funding momentum. The number and value of startup deals in the sector saw substantial growth over the same period a year ago, driven by changing beauty trends and online buying.

In China, a noteworthy deal was space startup Orienspace’s $60 million Series A round. The funding round drew Chinese VCs including HIKE Capital, which led the round, CMBC Capital, Vision Plus Capital, and SkySaga Capital Management.

The funds have amassed further dry powder.

Singapore-based Jungle Ventures has secured $600 million for a new fund backed by new investors including Mizuho Bank, StepStone Group, and family offices. Existing investors renewing their commitment to the VC firm include Temasek and IFC. We’d reported last year that it was set to raise its fourth fund on the back of a number of portfolio exits and comparatively robust returns for its first fund.

Hong Kong-based alternatives firm PAG has raised more than $2 billion for its fifth direct lending fund. PAG, which recently filed for an initial public offering on the Hong Kong stock exchange, is also in the market for a new $9 billion buyout fund.

Indonesia’s tech-focused Merah Putih fund, set up by the government in partnership with the state-owned companies’ VC arms, has secured $300 million in the first close for its debut vehicle.

Other firms in the market are:

Strategic Year Holdings, which is understood to be raising $500 million for its first dedicated Southeast Asia fund. The Hong Kong-based private equity firm has previously made seven investments in Southeast Asian startups from its balance sheet.

China-based venture capital firm Ondine Capital, which is launching a $100 million US dollar fund, also to focus on Southeast Asia.

Eight Roads Ventures, which has launched a $250 million fund targeted at healthcare and life sciences startups in India.

Looking ahead

Post-pandemic socialising (and consumption) is resuming with a vengeance and businesses are taking advantage of it.

In Indonesia, Fore Coffee has ambitious plans to open 100 stores in cities outside of Jakarta this year, its co-founder and CEO Vico Lomar told us. The startup had to close more than 50 stores when the pandemic hit. Backed by East Ventures, Agaeti Venture Capital, and Insignia Venture Partners, Fore Coffee isn’t the only venture-backed coffee chain eyeing expansion across the country, as Indonesians resume their coffee runs.

Antler, an early-stage venture capital firm based in Singapore, is committing up to $100 million to invest in more than 300 new companies in Southeast Asia.

That said, with volatility in the broader market and a sell-down in tech stocks, tech startups in Southeast Asia can expect to see a reset of valuations in the coming months. There are deals already being renegotiated, investors told us.

Indeed, Indonesian online beauty retailer Sociolla is believed to have moderated its valuation expectations for an ongoing funding round.

And as the private capital tap tightens, startups will be pushed to conserve cash and drive profitability quicker.

Already, in India, a number of startups have had to let go of employees in a bid to conserve cash. There were already seven this year; used car marketplace Cars24 was the latest as it announced laying off 600 people. Tough measures in Southeast Asia might not be far behind.

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