ATR KimEng Capital Partners, a subsidiary of listed Philippine firm ATR KimEng Financial, has formed a partnership with California-based Seagate Global Advisors to set up the first of a possible series of investment funds focused on China and Southeast Asia. To be named Seagate ATR KimEng Asian Development Fund I, it will target investments in unlisted Philippine firms.
ATR KimEng Capital is the largest non-bank affiliated investment house in the Philippines. The group is involved in: corporate finance and advisory services (equity IPOs and secondary offers, bond underwriting, mergers and acquisitions, debt restructuring); stockbroking and equity research; life and general insurance underwriting and distribution; asset management (mutual funds and trust fund management); foreign exchange and fixed income broking; and real estate investments.
Through its shareholder Kim Eng Holdings, a publicly listed company in Singapore, the group has equity distribution access throughout Southeast Asia, Europe and North America.
Seagate Global Advisors is an alternative asset management company that offers services in investments, trading, research and consulting with a focus on China and Asia. Based in Los Angeles, the firm has a staff of 12 and emerging market and global macro assets under management of around $70 million. Through a joint venture with China Everbright, the firm has a team of 11 in Shenzhen, China.
The deal between the two parties is "premised on the conviction that China is the engine for growth in the region now and going forward", ATR KimEng said in a disclosure to the Philippine Stock Exchange.
The funds will focus on countries which stand to be the primary beneficiaries of the strong growth and development of the Chinese economy, the firm adds. While the first fund is focused on the Philippines, it is understood that other markets in Asia will be the focus of succeeding portfolios.
The initial fund will focus on pre-IPO opportunities in the Philippines, particularly among companies involved in environmental businesses or services or so-called green enterprises, infrastructure, and services and commodities.
Investments will be decided by an investment committee that includes: William Lawton, chairman and CIO of Seagate; Douglas Metcalf, president of funds management at Seagate; Ramon Arnaiz, chairman of ATR KimEng Capital; and Manuel Tordesillas, president of ATR KimEng Capital.
ATR King Eng Capital and Seagate will each invest at least $1 million in the fund. Pending necessary approvals and depending on market conditions, the fund is expected to be marketed in the fourth quarter of 2009 to institutions in the US, Europe, Japan and the Middle East.
By targeting unlisted Philippine companies, the partnership hopes to take a stake with deeper discounts on valuations. Philippine shares have been lagging in Asian stock markets lately, with the country's relatively lacklustre economic outlook and relatively murky political environment causing international fund managers to look elsewhere in the region. Markets like the Philippines seem less able to stimulate domestic demand and still rely too heavily on exports. It also suffers from a relatively weaker recovery in corporate earnings, lagging consumption and slower implementation of fiscal stimulus.