Kendall Court, founded by three ex-investment bankers based in Singapore, has reached first closure on its mezzanine finance fund with $35 million in commitments. The funds have been provided by institutions from the US and Europe.
The company was founded in June this year to look at Southeast Asian investment opportunities in alternative financing. The firm's Chairman and managing partner is Yeo Kar Peng, who used to run Citigroup's Malaysian investment banking unit since 1998. Also a managing partner in the firm is Chris Chia, Yeo's colleague at Citigroup who worked on Malaysian and Singaporean M&A. The last of the triumvirate is Dennis Wuisan who was a banker with Goldman Sachs in Indonesia before founding his own financial advisory boutique.
Yeo and Chia left Citigroup earlier this year along with head of southeast Asian investment banking, Richard Seow and colleague Chang Tou Chen, who now runs the regional investment banking business for HSBC.
Kendall Court is looking at deals to invest $5 million to $10 million in companies with market caps of between $50 million and $150 million. They are looking to invest in the usual staple of mezzanine products such as convertible bonds, preferred shares and subordinated debt with warrants. But where this finance is usually provided as a pre-IPO bridge, Kendall Court will invest in public companies.
"We believe this type of capital fits the needs of today's Asian companies - providing capital that is minimally dilutive and complementary to senior debt," says Wuisan.
The money will be put to use for buyout, recapitalization and expansion purposes, often in conjunction with other financial sponsors. "Asia's investing environment is currently conducive for mezzanine - companies' continuing aversion to further equity dilution, volatile capital markets, cautionary bank lending environments, growing private equity market, a relatively non-existent high yield market for mid-market companies, are all factors contributing to demand for mezzanine in our targeted space," explains Chia.
According to Yeo, the firm is targeting a final close of $75 million by next June, but is look into get started on building a pipeline of deals, presumably while the market is hot. The name of company - Kendall Court - comes from a public area in the Massachusetts Institute of Technology, where students congregate to come up with ideas for new companies, technologies and other schemes for making themselves rich.