Beyond the buyout is our weekly newsletter dedicated to private equity developments across Asia Pacific, with a special focus on Southeast Asia.
This week was marked by several major exits in Asia, particularly in India, which ought to bring cheer to investors in the region. But first, let’s look at the public sector pushing efforts to drive growth in the private capital sector.
Hong Kong’s private market push
Hong Kong is moving to strengthen its position as a wealth hub in Asia with rival Singapore’s recent efforts to draw private capital.
Financial secretary Paul Chan announced in this week’s budget that a proposal is being drawn up on tax incentives for funds, family offices, and the distribution of carried interest by PE funds.
The measures include tax breaks on profits for pension funds and endowment funds, as has been made available for SWFs.
Chan also doubled down on plans to attract family offices to set up or expand in the city, as well as international listings on its bourse, targeting to work with issuers and sponsors from SE Asia and the Middle East.
Hong Kong is home to 2,700 single-family offices and hopes to attract 200 more by year-end. Singapore, which has seen the number of family offices grow in recent years, has roughly 2,000.
The Hong Kong Investment Corporation (HKIC), a nearly $8-billion wholly owned government investment fund, has invested in 90 tech firms, Chan added. The fund was established in 2022 to support startups and fund managers and has since committed to several AI and biotech unicorns in Hong Kong.
HKIC has drawn parallels with Singapore’s Temasek. But the difference is stark as the Republic’s state-owned investment firm boasts a portfolio of $290 billion and has been an investor in private markets for decades.
Fallout from eFishery
A prominent player in Southeast Asia’s aquaculture industry, e-Fishery seems to be emerging as a troubling data point for investors already cautious about the region’s investment climate.
DealStreetAsia’s reports this week included how investors could recover as much as 9 cents per dollar invested; and how the technology that was supposed to underpin the business was practically non-existent.
Meanwhile, a continuation fund that was to hold eFishery as the singular asset, and give some of its investors an exit while boosting the stake of others, was being lauded as the first of many for upcoming venture assets. But the scandal broke just as the vehicle was about to close. Since then, and despite initial interest, with a single party anchoring the deal in a highly competitive market, the outlook has dramatically shifted.
Some LPs see that investment sentiment in SE Asia could worsen, as concerns about the quality of assets and managers are further heightened. But others argue the failure of the continuation vehicle is not going to exacerbate already weak sentiment towards SE Asia.
As with the eFishery debacle, investors are facing near-wipeout; though one could argue that it appears to be par for the course in the VC universe, and the real issue is investors who are answerable to the public, such as Malaysian pension KWAP.
Regardless, there has been a push for liquidity and there is chatter about several deals in the pipeline.
Following the closing of the Indonesian VC East Ventures’ inaugural continuation fund, underwritten by secondary specialist Coller Capital, other Indonesia-based managers are understood to be exploring GP-led secondaries as traditional exit routes are hard to come by.
DealStreetAsia has reported such plans for Falcon House and Capsquare Asia Partners. It remains to be seen how many of these will materialise and when.
India leads the exits
Two major exits were clocked in the healthcare space in the past week, bringing much-needed relief to investors. First, KKR acquired a 54% stake in HealthCare Global Enterprises (HCG) for a whopping $400 million, paving the way for the exit of CVC Capital, which had bought a controlling stake in the cancer hospital chain in 2020.
The deal demonstrates tremendous interest in Indian hospitals by global players, who are increasingly stepping in to take the sector to the next level as local entrepreneurs build their companies from scratch.
In another transaction, Somerset Indus Capital Partners sold its entire 10% stake in Hexagon Nutrition to a group of investors. The PE firm had invested in the company in 2016.
In a separate development, Blackstone sold a 24.9% stake in specialty packaging and laminated tubes maker EPL to Indorama Netherlands for $220 million.
In China also, exits are seeing somewhat of a rebound. HighLight Capital scored several of them along with some $200 million in distributions to its LPs last year, its founder and CEO Steven Wang told DealStreetAsia, and it has its healthcare focus to thank.
In Singapore, mid-market fund Dymon Asia Private Equity is preparing to sell its shares in Meiban Corp Holdings, a Singapore-based molding company. Deutsche Bank has been engaged as the financial advisor for the potential sale, which could be initiated as soon as the first half of this year.
Asian secondaries
In India, 360 ONE Asset Management has closed its secondaries fund at $590 million, exceeding the original target of $480 million. “It is not US-styled GP or LP-led secondaries that buy stakes in other funds. We are doing direct secondaries with a late-stage thesis,” said Sameer Nath, CIO and head of the venture capital and private equity business at the firm.
Coller Capital closed a GP-led secondary transaction worth 229 million yuan ($31.5 million) in partnership with GSR Ventures, comprising eight of Coller’s assets in the consumer and tech sectors in China, with its RMB secondaries fund leading the deal.
Still, Asia Pacific’s market share in secondaries activity has declined, owing to a mix of geopolitical concerns, quality of managers, and a preference for resilient and predictable assets, said Partners Group managing director and regional head for private equity partnership investments Martin Liew.
Top PE updates
Youngtimers AG has signed a non-binding term sheet for the acquisition of Richmond Funds Management, as it doubles down on its APAC expansion efforts after merging with C Capital. The latest deal will see RFM become a part of Youngtimers and rebrand as C Capital Australia.
Motilal Oswal’s PE arm MO Alts is investing up to $53 million for a minority stake in Megafine Pharma. The deal marks the first sole control investment for MO Alts, which manages assets worth $2 billion across PE and real estate funds.
Hillhouse Investment’s logistics investment and fund management platform Gaolu Group recently secured $150 million in funding led by Orion Capital Asia. The deal opens up opportunities for global collaboration.
People moves
Joseph Tien, TPG Angelo Gordon’s former head of Asia and managing director in the client partnership group, has joined Hines to lead its fundraising efforts in the Asia Pacific region, PERE reported.
Affinity Equity Partners’ Mark Chudek has been named partner this week, per his LinkedIn profile. Chudek will report to the firm’s Asia partners, led by founding chairman and managing partner KY Tang.
