The highlights of this week were some significant deals that have finally come to pass, namely KKR’s acquisition of FUJI SOFT in Japan; and a long held-up divestment of Domino’s Pizza in Indonesia.
Everstone Capital’s exit from the fast food brand, said to have been in the works since 2020, comes as limited partners grow weary of the lack of distributions from their general partners. This is reflected in part in the broader fundraising trend for private equity firms with allocations to Southeast Asia, which has been lacklustre even as some $12 billion has been raised for strategies in the region over the last five years.
As one GP noted in DealStreetAsia DATA VANTAGE’s review out this week on private equity funds in Southeast Asia, there is much capital locked into legacy funds, which weakens fundraising momentum. Overall, PE fundraising in the region, based on final fund closes, amounted to just $1.32 billion in 2024 – the lowest in seven years.
Nevertheless there is optimism among investors, particularly in the Philippines, which is building up a robust pipeline of initial public offerings. It is already set to include an $860 million listing of Maynilad Water Services in July, and the highly-anticipated $1.5 billion IPO of Warburg Pincus-backed fintech GCash.
Among other exits said to be on the cards is the potential $5 billion sale of US healthcare supply chain management Global Healthcare Exchange by investors Temasek and Warburg Pincus.
Deals in the making
With FUJI SOFT in the bag, dealmakers at KKR are redirecting their attention to the $2.31 billion acquisition of Japanese medical gear maker Topcon, together with state-backed investor Japan Investment Corp. Topcon had been exploring a sale, apparently urged by activist investors including ValueAct Capital and Oasis Management Company with several PE suitors in the running.
Another hot asset is Bengaluru-based technology services firm SLK Software, underscoring the rising investor interest in India’s IT services sector. DealStreetAsia reporters have been told that global PE giant EQT has joined the ranks of top names vying for a majority stake in the firm, including TPG Capital-owned Altimetrik, and ChrysCapital. The company is said to be seeking a deal value of $800 million.
In the Philippines, two major telcos – Globe and Singapore’s Singtel – are forming a $33 million IT services joint venture. NCS, an IT subsidiary of Singtel, is acquiring a majority stake in Globe’s IT services subsidiary Yondu Inc.
What to watch
New sovereign fund Danantara Indonesia has announced a slate of influential international names as advisors, including hedge fund manager Ray Dalio, economist Jeffrey Sachs, and former Thai prime minister Thaksin Shinawatra.
But analysts whom DealStreetAsia spoke to expressed concern that questions about governance remain, and noted that while the well-known figures could help generate investments and strong returns for the organisation, it may also complicate the decision-making process.
Meanwhile, the governance scandals that have plagued the region’s startup ecosystem, most recently owing to fraud allegations at eFishery in Indonesia, will undoubtedly impact future fundraises, industry insiders say.
Investors have become more cautious about their commitments. But some observers tell DealStreetAsia that there remains significant potential, in particular to support the modernisation of the agricultural sector.
Jakarta-based venture capital firm Alpha JWC Ventures has hired a trio of seasoned investors from the now-defunct Sea Capital, the investment arm of Southeast Asia’s Sea Group, as it looks to expand into regional growth-stage investments.
Separately, SeaMoney (Capital) in Thailand, a digital lending subsidiary of Sea Group, is receiving up to $75 million in a senior tranche of asset-backed securities from IFC to support its activities.
In Singapore, the stock exchange is set to lose another equity listing as Indonesia’s Widjaja family, whose business interests span property, oil palm plantations, consumer goods, and pulp and paper, seeks to take private Sinarmas Land.
Around the time this was announced, the Monetary Authority of Singapore proposed a regulatory framework that would let retail investors invest in private equities, namely directly into private capital funds and funds-of-funds. The proposal comes as Singapore looks into boosting activity in both the public and private capital markets in the city-state.
This week’s LP interview is with Canadian development institution FinDev Canada, which has just established an office in Singapore as it builds out its Indo-Pacific strategy, investing in regional private equity strategies. The DFI, which has committed to Creador Fund VI, is looking at managers and strategies with a track record of distributions, but also meeting impact criteria.
Funds raising
Swedish private equity firm EQT has raised another $490 million for its ninth Asia buyout fund, which has a hard cap of $14.5 billion.
Asia-dedicated healthcare investment firm CBC Group has held a first close for its inaugural RMB-denominated fund that has a target of 10 billion yuan.
Singapore-based SC Capital Partners has closed its sixth Asia Pacific opportunistic real estate fund at $900 million, short of its $1-billion target.
Pantheon has closed its latest GP-led secondary fund at $1.1 billion at a time when more GPs, including Asian managers, are tapping continuation vehicles for exits. Among Pantheon’s transactions in Asia was ChrysCapital’s continuation fund for the National Stock Exchange of India.
Asian alternative investment firm PAG has closed its third Significant Risk Transfer fund at $1.25 billion.
