Dear Reader
This week had one of the highlights on the region’s private capital calendar – DealStreetAsia’s Asia PE-VC Summit, which in its tenth edition continues to draw more than 1200 allocators, managers, and entrepreneurs from across the private capital ecosystem in Asia.
Common themes that emerged include a focus on solid business fundamentals and operations, amid broader challenges in exits and distributions, and an uncertain economic environment. Bright spots are in healthcare and private credit as strategies, and markets in India and China, where strong public markets and tech innovation are driving activity.
Here’s a recap of top discussions over the two days:
Private Equity and Limited Partners Summit
Among managers and limited partners, the discussions centred on how valuation gaps, a weak exit environment, and the hunt for distributions are pushing increasing attention on secondaries and private credit as strategies.
This is as managers continue to diversify portfolios across asset classes and geographies, and focus on operational improvements to drive returns.
In fact, growing trade tensions with the US means that investors in Asia are finding more reason to look at investments that capitalise on the region’s strong domestic consumption, and industries that are “cashflow-focused” with clear secular demand.
Indeed, more China-based managers are returning to fundraising and re-engaging with LPs, as one session found.
On a related note, PE managers active in the Gulf region highlight the area’s potential as a strategic hub in the rebalancing of the global supply chain dynamics.
Meanwhile, India is seeing increasing investor interest, drawn by a maturing regulatory environment, a deepening corporate pool, and growing openness among founders to buyouts and secondary deals, amid a busyIPO market and robust valuation expectations.
The case for emerging managers was also in the spotlight, with limited partners noting differentiated strategies and highly-motivated teams that are more aligned with their interests.
Venture Capital and Founders Summit
Both investors and founders agreed that the focus continues to be on quality growth, with profitable business models, amid a broader reset.
Startup fundraising in Southeast Asia remains muted, even though there were three new co-called unicorns in the first half of this year, according to a new DealStreetAsia report released at the Summit.
What remains a concern, particularly in Southeast Asia, is the limited access to capital markets – a key source of liquidity for investors, which leads to longer holding periods for portfolios.
One bright spot could be in Vietnam, which has a number of high-profile listings in the pipe.
Meanwhile, in a fireside chat with DealStreetAsia’s Editor-in-Chief Joji Philip, Dantara’s senior director of investments, Sunata Tjiterosampurno revealed that the Indonesian sovereign fund plans to invest in global private equity, private credit, and private real estate managers.
This is not just for returns, but also global expertise in areas such as digital infrastructure and AI to help drive the country’s economic transformation. And in reflection of its risk appetite, the fund will focus on the private equity and credit managers, rather than early stage venture capital, at least in the beginning.
AI and Deep Tech Summit
There was much said about how space technology – including communication networks – is the next big thing, even beyond artificial intelligence.
In the meantime, deep tech is integrating with healthtech and greentech, with AI playing a growing role.
And, significant AI potential is emerging from Vietnam, which already has a high-quality generation of engineers, panellists noted.
Another notable trend is spinouts from academia in Asia, and professors and graduate students should be incentivised to take entrepreneurial risks.
Climate tech & ESG Summit
Investors observed that even as the climate finance gap remains massive, and growing, there are newer sources of funding that are stepping in to fill the voids.
A range of funders across the capital stack, backed by development finance institutions and other investors across Europe and Asia, are driving financing in climate-related sectors, helping to create bankable projects for commercial capital to step in.
This is critical as Asian countries need to accelerate their energy transition, not only to cut emissions, but to boost climate resilience across sectors, as impact investor Leslie Zambelli from Schneider Electric Energy Access Asia noted.
Indeed, as Linda Mok from Sarona Fund Management noted, this is an opportune time for investors particularly in the large underserved markets in the region.
Even as renewable energy and electric mobility dominate climate investment, recent policies, investments and commercialisation efforts are beginning to narrow the climate and decarbonisation technology gaps between Asia and the west, noted Melvyn Yeo, managing partner at TRIREC.
Watch out for more insights from the Summits on DealStreetAsia’s site in the week ahead.
Funds and raisings
Vantage Data Centers has secured a $1.6-billion investment led by an affiliate of Singapore’s sovereign wealth fund GIC, alongside a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), for its Asia Pacific expansion. Both GIC and ADIA are existing backers.
Indian early-stage venture capital firm AJVC has closed its maiden fund with capital commitments of nearly $23 million, more than double its original target. Backed by global LPs and family offices, the fund reached its final close just nine months after launch.
Indonesia-focused VC Intudo Ventures is considering secondaries for its portfolio companies, which include fintech unicorn Xendit, crypto exchange Pintu, and edtech platform Pintar. This comes ahead of the expiration of its 2017-vintage debut vehicle.
Singapore-based quantum sensing startup Atomionics has raised $8.8 million in a fresh round, according to regulatory filings. BHP Manganese Australia, a unit of global mining giant BHP, joined as a new investor, and the funding pushed up the company’s valuation nearly fivefold.
Indian edtech firm Eruditus has closed a refinancing of up to $150 million led by MARS Growth Capital, the joint venture between Liquidity and Japan’s MUFG Bank. The commitment is provided through a clubbed deal between Mars Growth Capital and HSBC, existing lenders of the company.
