This week, we look at the playbook of new sovereign wealth funds in the region; the untapped opportunity in India’s mid-market PE; and whether buyout strategies can give GPs and their investors the exits they need.
New class of SWFs built on syndicated trust
The market is getting an idea of how the two newest sovereign wealth funds in the region – the Philippines’ Maharlika Investment Corporation (MIC) and Daya Anagata Nusantara (Danantara) in Indonesia – are planning to go about their business.
While many other SWFs take co-investments as a strategy, for both Danantara and Maharlika, it is evolving into a core operating model. And it has important implications for how emerging markets with limited surpluses can mobilise global, sovereign capital at scale.
MIC has been unambiguous about this. In an exclusive with DealStreetAsia, president and CEO Rafael Jose Consing Jr. said he hopes that five out of the fund’s six strategic investment pillars would be undertaken with co-investors through “sub-funds”.
Already, Thailand’s largest conglomerate, CP Group, has signed up to partner with the Philippine SWF on a $1 billion PE fund focused on agriculture, food production, and sustainable energy and supply chain.
The Philippines also signed a memorandum of understanding (MOU) with Dubai’s logistics firm DP World to explore investment around ports and infrastructure in the country.
In Indonesia, Danantara has also signalled a keen interest in drawing foreign capital into its mix.
Only yesterday, Danantara and the Russian Direct Investment Fund (RDIF) signed an agreement to launch the Russia-Indonesia Direct Investment Platform (RIDNIP), a joint initiative with up to €2 billion ($2.3 billion) in capital to support investments in both countries and strengthen bilateral economic ties.
This week, Temasek said it “welcomes” the thought of working with Danantara, after Indonesian President Prabowo Subianto extended an invitation for the Singapore state investor to collaborate during his visit to the Republic.
Earlier in April, Danantara launched a $4-billion joint investment fund with Qatar Investment Authority, with each party putting in $2 billion. Indonesia says they are working on other bilateral partnerships such as with Japan, China, Australia, and Malaysia, noting these countries’ increasing willingness to a “co-investment scheme”.
It would seem that neither Indonesia nor the Philippines has the luxury of building a fund the old-fashioned way, whether from budget or current account surpluses. Much of the domestic friction around both funds stems from concerns over how they’re financed and what guardrails are in place.
