With just hours to go before Finance Minister Nirmala Sitharaman unveils India’s Union Budget 2025, all eyes are on key reform measures proposed by Alternative Investment Funds (AIFs) to boost the sector.
As India aspires to become a $10-trillion economy by 2032, creating a thriving ecosystem of venture funding and risk capital is crucial.
The industry has urged the government to address tax ambiguities surrounding AIF operations, including the characterisation of gains, tax treatment upon fund closure, and parity in taxation between foreign and domestic funds.
Currently, regulations treat PE-VC firms differently based on whether they are incorporated as a trust, an LLP, or as a company. This has created a multiplicity of regulations.
Bringing parity in this sphere will enhance the ease of doing business in India and pave the way for a globally competitive alternatives landscape.
eFishery woes continue
Moving on to Southeast Asia, the eFishery saga continues to unfold, causing a ripple effect not only in its home base Indonesia but across the region, raising questions about startup governance and financial irregularities.
In the latest string of events, investors in the aquatech unicorn such as 42XFund, KWAP, responsAbility, Northstar, Temasek, and SoftBank are understood to be divided on whether to find a new management to revive the company.
Tough fundraising environment?
As more and more fund managers hit the road to raise capital, key questions emerge on how easy or difficult the fundraising process will be going forward.
Investors are becoming increasingly selective, prioritising proven performance and disciplined capital allocation over fund managers with little experience.
In a recent interview, India’s Deepak Padaki, President, Catamaran Ventures, the family office of former Infosys chairman NR Narayana Murthy, told DealStreetAsia: “The average DPIs are low. We are also observing a more cautious deployment of capital by funds across all stages.” While this may primarily impact first-time fund managers, those with a successful track record of investments and exits will sail through, he added. Read more
However, this is not a trend confined to India. In the rest of APAC as well, returns have failed to match those of US-focused funds, experts said in the past.
Deals Diary
StepStone and AB Value Capital have led a multi-asset continuation fund for CDIB Capital Group’s private fund arm, housing mid-market buyout assets across Greater China.
IPO-bound Indian e-commerce platform Meesho is understood to have closed a $550-million funding round after securing an additional $250-270 million from Tiger Global, Think Investments, and Mars Growth Capital.
Singapore’s Everstone Capital acquired a majority stake in India’s bootstrapped SaaS firm Wingify.
Brookfield has closed two real estate investments in Japan worth a combined $1.6 billion.
L Catterton has partnered with Megabass, a Japanese premium fishing gear maker.
Cashing out profitably
Macquarie’s asset management arm has sold a 26% equity and debt interest in Taiwan’s Formosa 2 Offshore Wind Farm to a subsidiary of Taipei-listed J&V Energy in a deal that saw Taiwan Life Insurance and He Jun Energy joining as capital partners.
Macquarie’s second private infrastructure fund for Asia has paid out $272 million to one of its LPs, Filipino pension manager Government Service Insurance System, following the sale of the fund’s stake in AirTrunk, which was valued at A$24 billion.
KKR is said to be seeking an exit from Vietnamese education group EQuest. The PE major is understood to have initiated talks with nearly eight financial and strategic partners such as TPG and CPP Investments-backed Nord Anglia.
People moves
Carlyle has roped in Citi executive Brad McCarthy as the new managing director and Asia Pacific chief of its global wealth division.
India’s Kedaara Capital announced the appointment of Jai Shankar Krishnan as an operating advisor.
Anurag Sud, India head of London-headquartered Apax Partners, is understood to have quit after a three-year stint, with Harjot Dhaliwal, a partner in the tech team, expected to lead the country’s operations.
On a fundraising trail
Investcorp has been chosen by a large Asian institution to invest over $100 million in Southeast Asia. The Bahrain-based giant, alongside other firms such as Navis Capital, Vistria, and Nexus Point, is understood to have been chosen by Malaysian public service retirement fund KWAP for its Dana Pemacu initiative.
Separately, at the World Economic Forum’s annual meeting in Davos, Investcorp said it is looking to ramp up its investments in India.
Regulatory update
Policymakers have stepped in to resolve key pain points in China’s VC investment life cycle. This gains steam amid the growing number of complaints about the dominance of government guidance funds (GGFs) in the country’s PE-VC sector.
Earnings
The Hong Kong Monetary Authority’s alternative asset portfolio provided an annualised IRR of 11.5% in the first three quarters of 2024, according to a presentation. The market value of its private equity holdings was HK$433.3 billion ($55.6 billion) and real estate HK$109.8 billion ($14 billion) in the same period.
Norges Bank Investment Management reported a record annual profit of 2.51 trillion crowns ($222 billion), driven by last year’s tech rally. But the sovereign wealth fund also warned that strong returns won’t last forever.
What to look out for
Ares and Keppel are set to hold their full-year earnings briefing next Wednesday, followed by Singapore Exchange’s first half-year results for financial year 2025 and KKR’s Q4 2024 results on Thursday.
