Deal flow has been robust across Asia, particularly in Singapore, as both funds and startups secure capital for growth coming out of the pandemic.
There has also been some buzz this week in Malaysia, as competition for the country’s five digital banking licences picks up.
Among the deals said to be in the market is Indonesian media and technology conglomerate Emtek Group‘s investment in Bank of India Indonesia. Emtek is the largest shareholder of Indonesian e-commerce unicorn Bukalapak and e-wallet DANA.
Other significant transactions in Southeast Asia announced during the week include Fairbanc’s pre-Series A funding round of at least $2 million from investors including ADB Ventures and East Ventures.
On the fundraising trail
Temasek-backed Vertex Ventures is about to secure $330 million for the first close for its second growth fund, which has a hard cap of $400 million. Vertex Growth’s debut fund closed at $290 million in 2019. Managing director James Lee said in an interview that the firm expects to diversify its LP base with the fund.
Among its investors are South Korean government-backed fund-of-funds Korea Venture Investment Corporation (KVIC), which is committing $15 million to the fund.
So far this year KVIC, which deploys about $100 million globally every year, has approved commitments of $37.5 million to five venture funds in the Asia Pacific and the Middle East and North Africa. The other GPs are China’s Northern Light VC and Vietnam’s Do Ventures.
Northern Light, which backs early-stage startups in China and the US, is raising $700 million for its new RMB-denominated and US dollar funds. The firm is an investor in Chinese food delivery player Meituan and genomics company BGI.
Singapore-headquartered Velocity Ventures has secured $8 million for its Southeast Asia-focused hospitality and travel fund. The target corpus is $20 million for deployment into seed and early-stage tech-enabled startups, as well as distressed travel and hospitality companies.
In Indonesia, Alpha JWC Ventures is raising $300 million for its third fund. Its second fund closed at $123 million in 2019.
Separately, Singapore-headquartered B2B retail platform Zilingo is believed to have raised $35 million from existing shareholders in a bridge round that took place about half a year ago.
In private equity, Indian firm Kedaara Capital secured commitments of $221 million from 13 investors for the first close of its Kedaara Capital Growth Fund III. The predecessor fund closed in 2017 at $750 million.
In Malaysia, Creador is expecting to secure the first close of its fifth fund this month, even as it aims to fully deploy the predecessor fund with two investments on track to close in August, Creador founder and CEO Brahmal Vasudevan told DealStreetAsia.
Another Malaysian PE firm, Bintang Capital Partners, is targeting to raise 300 million ringgit, or $72 million, for its new vehicle by September, under the Malaysian government matching fund-of-funds scheme. Bintang has already raised 40 million so far, managing partner Johan Rozali-Wathooth told DealStreetAsia.
Separately, government-linked PE firm Ekuiti Nasional (Ekuinas) reported that its second fund recorded a gross portfolio return of 517.2 million ringgit. This translates to a gross internal rate of return (IRR) of 11.9% per annum, and a net IRR of 8.2%, for the 1 billion ringgit Ekuinas Direct (Tranche II) Fund.
However, the 1.5 billion ringgit Ekuinas Direct (Tranche III) Fund recorded a gross portfolio loss of 75.4 million ringgit, or a negative gross IRR of 3.2% per annum.
Investors deploying at pace
Singapore state investor Temasek is set to lead a $100 million funding round in Indian neobank Open. The startup is also in talks with existing investors Tiger Global and 3one4 Capital to raise capital.
Fintech startups in Southeast Asia have also been tapping more capital, as DealStreetAsia’s DATA VANTAGE newsletter this week noted.
Among the fundraising updates were Singapore’s GrabPay securing $55 million, blockchain startup Contour’s $13.4 million financing, and Indonesia’s bookkeeping app BukuKas’s $50 million Series B funding led by Hedosophia.
Hedosophia, founded by London-based tech investor Ian Osborne, has now added two Southeast Asia firms to its portfolio. The firm has also invested in Singapore corporate services startup Osome’s $16 million Series A round.
Also in Singapore, wealth management platform Endowus has raised an additional $4.5 million from UBS, Samsung Ventures, and Singtel Innov8. The startup had raised $17 million in March.
In the Philippines, mobile payments startup Voyager Innovations has raised $167 million from investors that include its existing shareholders PLDT, KKR, and Tencent. New investors in the round include IFC Financial Institutions Growth Fund.
Over in Vietnam, e-commerce company Tiki has raised 1 trillion dong via corporate bonds – the first time it has done so. The funds will be used for short-term working capital. DealStreetAsia also understands that Tiki has secured the first close of its Series E round at around $100 million led by a global strategic investor.
In India, insurtech startup Digit Insurance is raising up to $200 million from investors that include Sequoia Capital India and Faering Capital. The fresh funding will value Digit at $3.5 billion.
Other deals this week include Partners Group acquiring a 24.9% stake in Chinese freight forwarder Apex International and Strattner Alternative Credit Fund investing $350 million in Malaysian construction and e-business software application developer Vivocom International Holdings.
Separately, as Southeast Asia’s biggest startups race to the finish line – a public market listing either through a special purpose acquisition company or the traditional initial public offering – there are hurdles still they must cross.
For ride-hailing and food delivery apps, it is the discontent among the very people who have helped their business scale – the drivers and riders ‘contracted’ to ferry commuters, parcels, food, and groceries.
For Grab, in particular, even as its merger with blank-cheque firm Altimeter Growth Corp has been delayed, ostensibly owing to audit requirements, it is banking on its financial services business for growth. However, the unit still has some way to go, and its business faces fierce competition from GoTo in Indonesia.
The financial services sector in Indonesia is still evolving and therefore, drawing more market participants and competition, wealthtech startup Stockbit co-founder Sigit Kouwagam said in an interview.
Meanwhile, as Indonesian marketplace Bukalapak is set to list on the Indonesian Stock Exchange by the end of this month – the first of its batch of Southeast Asian unicorns to become a public company – there are doubts whether a domestic listing is the best course for the company.
In Vietnam, the pandemic has driven a clear distinction between startups that continue to show post-crisis potential, and others. A look at startup valuations in the country hints at a correction and a decline in deals.
Still, coming out of the pandemic, deal momentum is set to pick up, even for companies in the more traditional, offline sectors, observers say.
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