A new generation of private equity firms is emerging in Asia, many of which are putting operational expertise at the core of their strategy, rather than simply relying on market appreciation to boost the value of their investee companies.
As competition for investee companies and investor money gets fiercer, PE firms are under growing pressure to bring in people who can add real value to portfolio companies’ management teams and prove their alpha-generation capabilities to limited partners (that is, investors).
AsianInvestor has identified eight such general partners, which are taking the lead in operations, localisation and specialisation, or re-engineering traditional strategies for a more demanding LP base.
We published details of the first four yesterday, along with details of the methodology behind the selection – click here to access that article. Below we list the other four firms, in alphabetical order.
The full, extended article with more details about each firm on the list appeared in the October issue of AsianInvestor.
Dymon Asia Private Equity
First fund closed: October 2014
AUM (including co-investment): S$300m
Focus: SMEs in Southeast Asia
Dymon Asia Private Equity is part of a larger institutional investor, unlike the other firms on this list. Its parent, Dymon Asia Capital, is a $4.5 billion hedge fund and alternatives manager based in Singapore.
While most GPs have a tendency to talk up their value-creating strategies, Gerald Chiu, partner at Dymon PE, speaks frankly about the team’s strengths given that their backgrounds are largely in investment banking. This means they help their investees look at consolidation plays and vertical integration, and help to recruit supplementary C-level hires. That said, they plan to expand their operations team. The firm’s value proposition for investees is straightforward, as it relies on traditional financial expertise.
Dymon PE is sector-agnostic, although it stays away from real estate and natural resources. Its acquisition strategy is flexible, having taken minority growth positions in four investments, and control positions in two buyouts.
Heliconia, a subsidiary of Singapore state investment firm Temasek, is an anchor investor in Dymon PE.
KV Asia Capital
First fund closed: August 2013
Focus: Asean growth equity
KV Asia makes growth equity investments in mid-sized companies in Southeast Asia. So far, all of its activity has focused on Singapore-based companies.
Founder Karam Butalia was formerly global head of Standard Chartered Private Equity. He has also worked at Citi throughout the region and was a partner leading UK PE firm CVC’s Indonesia business. KV Asia closed its first fund at $260 million in August 2013.
Until the fund made an investment in a chocolate manufacturer in March 2015, it had a reputation for doing deals in the healthcare arena: in Singapore, it acquired skincare brand DRx Group in 2013, and Orange Valley Healthcare, a nursing care provider, in 2014.
With only four investments under its belt, the fund is not expected to start fundraising until at least next year. Market chatter is that KV Asia has great potential.
First fund closed: China car parks, March 2013
Headquarters: Hong Kong
Focus: Niche real-estate asset classes
LimeTree Capital focuses on niche investment strategies with a property bias. One fund is focused on car parks in China, and the other on beachfront land across Asia. Both were raised in the last five years. The firm is based in Hong Kong and has offices in Shanghai and Bangkok and $570 million in assets under management.
LimeTree acquires, develops and operates car parks in China, where its investment thesis centres around conspicuous supply and demand imbalances. It intends to ride the thermals of government policy-makers struggling to solve their cities’ car park crunch.
In acquiring beachfront land in Asia, it works with developers to turn it into liveable and desirable properties as more tourist destinations are developed for the growing affluent Asian population.
The founders are James Goulding, an investment manager with experience in long-only and alternative asset classes, and Robin Holdsworth, a real estate specialist. It will be interesting to follow the firm as it unveils more unorthodox investment theses.
First fund closed: December 2010
AUM (including co-investment): $1.14bn
Focus: Healthcare services, products and technology in South and Southeast Asia
Healthcare specialist investor Quadria is riding regional trends as Southeast Asia’s population grows increasingly affluent and can afford better care. The firm has gathered a team with multi-disciplinary backgrounds, lending itself well to operational value-creation at portfolio companies.
Quadria was founded by Abrar Mir and Amit Varma. Mir brings deal-making chops to the table, with a background in investment banking. Varma contributes two decades of strategic and operating expertise gleaned from time spent as both a physician and serving in management at healthcare organisations, on top of time spent as a dealmaker and GP in an Indian domestic healthcare and education fund.
Concentrating on growth equity and betting on motivated entrepreneurs, Quadria generally avoids buyout transactions, but will usually take a large minority position (30% to 40%). Its investment sweet-spot is an equity ticket size of $60 million to $80 million.
The first fund took almost three years to close, but Quadria has moved quickly since then. It closed its first vehicle, an India-only strategy, at $100 million in December 2010, and then deployed a Southeast Asia-focused vehicle at $700 million during 2011-2012. In May 2015, the partners closed their third fund at $304 million.