the digital edition

Asia’s Private Equity News Source
avcj.com February 05 2013 Volume 26 Number 06
Editor’s Viewpoint
Asia’s PE community
needs a public platform
Page 3
News
Archer, Avigo, Baring,
Blackstone, IDG,
Ironbridge, Orchid, RRJ
Page 4
Deal of the week
Hahn & Co buys shipping
line out of bankruptcy
Page 12
Everstone sees Transpole
as logistics consolidator
Page 13
Funds
Lightspeed raises debut
China venture fund
Page 13
Suffering in silence
Why Asia’s private equity associations must engage with government
Focus
Page 7
Industry Q&A
Mukund Rajan of Tata
Opportunities Fund
Page 14
AVCJ Research
Data f ile
Page 15
Deal of the Week
Bridging the VC gap King of call centers
Asia’s start-ups face a Series A crunch
Page 11
CVC secures Philippines BPO carve-out
HAPPY holidays TO ALL OUR READERS! AVCJ WILL RETURN February 19, 2013
Page 12
Editor’s Viewpoint
allen.lee@incisivemedia.com
A platform for
private equity
A few weeks ago, I met the head of
private equity of one of the largest pension funds
in Asia and the world. A very impressive guy with
terrific insight of the market, our conversation
was great (from my standpoint) until I invited him
to attend (and possibly speak in) some of our
events. He said that there was little value for him
to see most of the fund managers speaking on
stage as they were already in his portfolio and he
was familiar with their views. He also expressed
concerns about being chased by GPs from other
firms looking for allocations.
I can relate to his point of view to a certain
extent. Over the years, I’ve seen many notable
speakers, from both the LP and GP sides, mobbed
by other managers, investors, service providers
and press as soon as they leave the stage. Many
of these individuals, usually GPs (for various
reasons) have come to accept this as part of the
job.
To LPs who shrink from the spotlight, I would
suggest that there are two major reasons for
participating at industry events such as ours:
leadership and communication. Like it or not,
many of the larger and more experienced
organizations are looked upon for leadership
by their peers. They need to communicate their
views on the issues facing the market and its
future direction – and where better than face-toface with their private equity colleagues. It can be
as simple as that.
As GPs often remark – with a mixture of
frustration and opportunism – a number of Asia’s
emerging LPs have little experience with the
asset class, having just graduated from public
equities and fixed income. They are unable to
provide much insight on private equity and this
makes it all the more important that institutional
investors with longer track records seek to play
a role in creating a sustainable future for the
industry. Public discussion, and by extension
education, is a good first step. While there are
CIO get-togethers that are used as forums for
such discussions, they tend to take place behind
closed doors. What is a prospective LP to do if he
doesn’t have an invitation?
As for GPs, there are of course a number of
reasons why they should participate, besides
fundraising and marketing. We have seen, over
Number 06 | Volume 26 | February 05 2013 | avcj.com
our 25 years in the business, how beneficial it is
for them to share with an audience their firm’s
take on the opportunities in the market. As much
as everyone hates to admit this, there is a bit of a
herd mentality within private equity. Discussing
the trends, challenges and opportunities helps
the industry to focus on issues that require
collective effort.
And perhaps more importantly, top GPs – just
like top LPs – should show their leadership within
and outside the private equity and venture
capital community. As I have argued before, the
industry is now too big to be ignored. Private
equity deals dominate the financial media (take a
bow, Michael Dell and Silver Lake), while venture
capitalists are acknowledged as the brains
behind tech gurus working for NASDAQ-listed
companies. The role of a senior partners at a
global buyout firm is not that dissimilar to that of
a CEO at a Fortune 500 company.
The need to communicate outside your own
pool of staff, portfolio companies and LPs is
obvious. Private equity has been misunderstood
in the past and it is up to the industry as a whole
to make sure this doesn’t happen in the future.
An open forum is the ideal setting for leaders to
come together and make their voices heard –
to the industry and to politicians, government
officials, corporate executives and the media, all
of whom also attend our events.
Allen Lee
Publisher
Asian Venture Capital Journal
Managing Editor
Tim Burroughs (852) 3411 4909
Staff Writer
Alvina Yuen (852) 3411 4907
Andrew Woodman (852) 3411 4852
Creative Director
Dicky Tang
Designers
Catherine Chau, Edith Leung,
Mansfield Hor, Tony Chow
Senior Research Manager
Helen Lee
Research Manager
Alfred Lam
Research Associates
Herbert Yum, Jason Chong, Kaho Mak
Circulation Manager
Sally Yip
Circulation Administrator
Prudence Lau
Senior Manager, Delegate Sales
Anil Nathani
Senior Marketing Manager
Stacey Cross
Marketing Manager
Rebecca Yuen
Director, Business Development
Darryl Mag
Manager, Business Development
Samuel Lau
Sales Coordinator
Debbie Koo
Conference Managers
Jonathon Cohen, Sarah Doyle, Zachary Reff,
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Amelie Poon
Conference Coordinator
Fiona Keung, Jovial Chung
Publisher & General Manager
Allen Lee
Managing Director
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Dan Schwartz
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ISSN 1817-1648 Copyright © 2013
3
News
GLOBAL
Blackstone buys majority
stake in seaplane operator
ever periods as the fleet management books of
Australia’s biggest firms are set to go to tender.
CVC seeks $12.2b for latest
global buyout fund
The Blackstone Group has acquired a majority
stake in two Maldives-based seaplane operators,
Maldivian Air Taxi (MAT) and Tran Maldivian
Airways (TMA).
GREATER CHINA
CVC Capital Partners is targeting EUR9 billion
($12.2 billion) for its next global buyout fund. The
private equity firm plans to raise less than the
EUR10.75 billion it got for its previous global fund
in 2008 but has set no upper limit.
Baring Private Equity Asia (BPEA) has completed
its exit from Airtac International Group, a
Taiwan-founded but now mainland Chinaheadquartered manufacturer of pneumatic
components. The PE firm sold its remaining 7.2%
holding through via the public market, raising
NT$1.89 billion ($64 million).
SFERS hires New York State
Common’s Art Wang
San Francisco Employees’ Retirement System
(SFERS) has appointed Art Wang as managing
director for private markets, with responsibility for
private equity, real estate and real assets. He joins
from New York State Common Retirement Fund
(NYSCRF) where he was director of private equity.
ASIA PACIFIC
Anil Ahuja departs 3i
Anil Ahuja, managing partner and head of Asia
for 3i, has quit the private equity firm. Ahuja is
leaving to pursue other opportunities, although
he will still operate as a part-time consultant to
3i. Samir Palod, a partner in 3i’s infrastructure
business, has been appointed as managing
director for India with immediate effect.
RRJ Capital raises $3.5b for
Fund II
RRJ Capital has reportedly raised $3.5 billion for
its second fund. The Hong Kong-based GP, which
was set up by Richard Ong, formerly of Goldman
Sachs and Hopu Investment Management,
originally targeted up to $5 billion for the vehicle.
AUSTRALASIA
Adventure Capital targets
$100m VC fund
Australian VC firm Adventure Capital is targeting
around $100 million for its debut vehicle. It has
already received $20 million in commitments
from high net worth individuals and is now
approaching institutional players.
Quadrant-owned Virtus
Health targets IPO in 2013
Quadrant Private Equity is targeting a A$500
4
Baring PE Asia exits
Taiwan-listed Airtac
The two firms provide services to resort
islands from Hulhule Airport Island. Founded in
1992, MAT is claimed by Blackstone to be biggest
seaplane operator in the world. Trans Maldivian
Airways, founded in 1989, has more than 20
seaplanes in its fleet. Combined, the businesses
will operate 44 seaplanes with more than 100,000
flights annually.
The terms of the deal were not disclosed. The
owners of the companies will still retain a stake in
the business and serve as directors on the board,
Blackstone said in a statement.
“We are excited to partner with MAT and TMA,
whose seaplane operations have contributed
significantly to the development of resort islands,”
said Prakash Melwani, chief investment officer of
Blackstone’s private equity unit.
Located southwest of India, the Maldives has
a population of about 400,000 and a group of
1,190 coral islands. Around 198 of the islands,
spread across 559 miles, are inhabited. Popular
for its “one-island one-resort” concept, the island
has seen a surge in tourist arrivals in recent years
with 2012 reaching an all-time high of nearly one
million visitors.
million ($520 million) IPO this year for its portfolio
company Virtus Health, Australia’s largest fertility
business. It was reported in September that
Quadrant had refinanced Virtus with A$225
million of debt after a failed sales process.
Ironbridge’s FleetPartners
to tap debt markets
Fleet Partners, an Australian vehicle-leasing firm
backed by Ironbridge and the Government of
Singapore Investment Corp. (GIC), plans to raise
more than $200 million in debt ahead of its
IPO. The firm is gearing up for one of its busiest
Cathay Fortune abandons
Discovery Metals bid
Cathay Fortune Corporation (CFC), the private
equity group founded by Chinese billionaire
Yong Yu, has abandoned its A$830 million ($848
million) takeover bid for Australian copper miner
Discovery Metals. Discovery shares plummeted
as much as 7.5% to a five-month low of A$0.96
during morning trading in Sydney on Monday.
RRJ Capital acquires
kidswear brand Kingkow
RRJ Capital has acquired a 75% stake in Hong
Kong-based children’s wear retailer Kingkow.
Kingkow was set up in 1998 and is owned by SKC
Group. The firm manufactures and sells children’s
clothing and accessories for ages 14 and under.
Baring increases stake in
HK-listed Magic Holdings
Baring Private Equity Asia (BPEA) has increased
its stake in Hong Kong-listed beauty products
retailer Magic Holdings, purchasing 7.34 million
shares on the open market for HK$22.26 million
($2.9 million). It remains the largest individual
investor in the company with a 21.03% holding.
Chinese firms say red tape
hinders M&A in Europe
More than three-quarters of Chinese companies
encounter operating difficulties in the EU while
nearly half have been obstructed by regulatory
issues, according to a survey by the EU Chamber
of Commerce in China.
CPEH backs Malaysia’s
Patimas Computers
China Private Equity Investment Holdings
avcj.com | February 05 2013 | Volume 26 | Number 06
News
(CPEH) has acquired a minority interest in
Patimas Computers, a Malaysian information
and communications technology provider. The
PE firm, which is listed on London’s AIM bourse,
purchased 43 million shares at MYR0.10 apiece
for a total consideration of MYR4.3 million ($1.38
million). It now holds a 5.2% stake in Patimas.
Lunar enters partnership
with Pinco Pallino
Lunar Capital has entered into a partnership with
Italian children’s fashion brand “I Pinco Pallino” to
expand its presence in China and East Asia. Under
the agreement, Lunar and Pinco Pallino, which is
owned by Italian private equity firm Opera, plan
to set up a joint venture.
Trafigura subsidiary buys
Ausfuel from Archer Capital
Archer Capital has exited Ausfuel to Puma Energy,
a subsidiary of Trafigura, for a reported cash
sum of $650 million. The Australian GP acquired
a majority stake in the company from CHAMP
Ventures in 2010, paying around A$120 million
($125 million).
Puma is taking full ownership of Ausfuel,
buying out minority shareholders in addition to
Archer. Through the addition of Ausfuel - which
owns the Gull, Choice and Peak service stations
- to its existing portfolio, Puma will become
Australia’s largest independent fuel retailer.
the International Finance Corporation (IFC),
the investment arm of the World Bank. A
memorandum of understanding will be the
foundation of discussions for setting up the fund,
which will focus on small and growth enterprises
(SGEs) across sectors in the north-eastern India.
NSR targets exit as India’s
Ortel files for IPO
New Silk Route (NSR) is set to exit Indian cable
TV provider Ortel Communications with the
company planning to raise as much as INR1
billion ($18.7 million) through an IPO. This is the
second time Ortel has tried to go public, having
pulled out of an offering two years ago due to
volatile market conditions.
Orchid-backed Time Watch
raises $105m in HK IPO
Sequoia joins search
engine Series A round
Time Watch Investments has raised HK$810
million ($105 million) in its Hong Kong IPO after
pricing shares at the top end of the indicative
range. Orchid Asia participated as a cornerstone
investor, taking just over one quarter of the 600
million shares offered.
Sequoia Capital India has joined Qualcomm
Ventures in investing over $1 million in Dexetra,
the maker of Friday, a personal search mobile
application. According to TechCrunch, the actual
amount invested, said to be between $1 million
and $2 million, has not been disclosed as there is
the possibility new investors will be joining the
round at a later date.
NORTH ASIA
Japan’s Orix signs up for
Mongolia Fund
Japan’s Orix Corporation will invest in Mongolia
Opportunities Fund I, reputedly the country’s
first ever PE vehicle. Orix aims to use the fund,
established by Mongolia Opportunities Partners,
to make its own first investments in country.
HIG Capital sells Anvis to
Japan’s Tokai Rubber
HIG Capital has sold German car parts maker
Anvis to Japan’s Tokai Rubber Industries for
EUR132 million ($177.91 million). Financial terms
of the deal were not undisclosed.
HIG first acquired Anvis in December, 2010.
SOUTH ASIA
Avigo, Matrix back Indian
education group
Avigo Capital and Matrix Partners India have
invested INR1 billion ($18.7 million) in education
service provider Maharana Infrastructure and
Professional Services (MIPS) This is the second
round of funding for MIPS.
Number 06 | Volume 26 | February 05 2013 | avcj.com
The Trafigura subsidiary made its first
investment in the country only a matter of
weeks ago, paying approximately $200 million
for Neumann Petroleum. Neumann owned 120
service stations in Queensland and New South
Wales. The Ausfuel acquisition brings another
110 retail sites and 11 depots, with coverage
extending to Western Australia, Northern Territory
and South Australia.
“We have been successful in building this
business from selling 300 million liter per annum
to more than 1.2 billion liter per annum in
less than three years, and in the process have
significantly improved its performance, revenues
and profitability,” Peter Gold, managing director
at Archer, said in a statement. “We are delighted
to be selling to Puma Energy who share a similar
vision and can take it to the next level.”
IDG targets $175m for
second India fund
IDG Ventures India is targeting $175 million for
its second India-focused fund, according to a US
regulatory filing. The predecessor vehicle raised
$150 million in 2007.
India’s Yes Bank to set up
PE fund with IFC
Yes Bank, India’s fourth largest privately
owned lender, is to create a joint fund with
Tata Capital to raise
maiden distress fund
Tata Capital, the private equity arm of India’s
Tata group, plans to raise nearly INR5 billion ($94
million) for its maiden distress assets fund.
The Tata Capital Special Situations Fund has
already attracted five state-run banks as LPs and
may be fully subscribed by March.
Aditya Birla-backed V-Mart
raises $2.6m
Aditya Birla-backed V Mart Retail, a budget
Indian retailer, has raised INR141 million ($2.6
million) from anchor investors, after finalizing the
allocation of 674,000 shares at INRR210 apiece.
IDFC Premier Equity Fund purchased 64.70% of
the shares, with Morgan Stanley Mutual Fund
taking the remainder.
ePlanet exits agrochemicals firm
ePlanet will exit Indian agro-chemicals firm
Sree Ramcides Chemicals as Japan’s SDS
Biotech invests INR1 billion ($18.8 million) in the
company for a 65% stake. ePlanet, which invested
around INR220 million for 36% stake in the
company in 2008, exited for INR500-520million.
5
Cover Story
tim.burroughs@incisivemedia.com
Asian advocacy
PE practitioners like light-touch regulation and usually prefer to stay at arm’s length from government. A
combination of global and national pressures has forced industry associations to revisit their strategies
The battle lines have been drawn
by China’s regulators as they fight for the
right to govern domestic private equity. It is a
heavyweight matchup between the National
Development and Reform Commission (NDRC),
the country’s top policymaking body and the
industry’s incumbent regulator, and the China
Securities Regulatory Commission (CSRC), which
is keen to follow the developed market model
where the securities watchdog is responsible for
private equity.
Caught in the middle are numerous industry
associations, pulled this way and that by a
complicated patchwork of allegiances.
This territorial dispute broke into the open
towards the end of last year as policymakers
ended their deliberations over proposed
alterations to the Securities Investment Funds
Law. The big question was whether private equity
would be included, and therefore brought under
the CSRC’s purview.
“On the one hand, less onerous regulation
is good for the industry, and participants prefer
not to be subject to a second set of rules in
addition to those laid down by the NDRC,” says
James Wang, a partner at Han Kun Law Offices in
Beijing. “On the other hand, they don’t want to
cut ties to the CSRC. PE firms have traditionally
relied on IPOs as their main exit channel.”
Any impressions that the matter had
been settled when PE was excluded from the
regulation were undermined by the small
print. The language leaves sufficient room for
interpretation that the CSRC could still wield
significant influence over “non-publicly offered
funds.” Meanwhile, several leading private equity
firms appear to be voting with their feet. Hony
Capital is among those to have joined the new
Asset Management Association of China (AMAC)
as “asset management members.” To some, this is
tantamount to quasi record-filing with the CSRC.
“When we deal with the NDRC and CSRC
it’s clear they are at war with each other,” one
international LP tells AVCJ. “Both are using
industry associations as battlefields to recruit
more members and gain influence. As long as
the situation remains unclear they will continue
the battle. If you are a local GP, which side are you
talking to? Or are you talking to both sides?”
Industry participants are not opposed to
Number 06 | Volume 26 | February 05 2013 | avcj.com
regulation – the current NDRC guidelines are
seen by many as insufficient, allowing smaller
funds to evade oversight – but they want a single
set of rules from a single authority. As Maurice
Hoo, global leader of Orrick’s M&A and PE
practice and legal counsel to the China Venture
Capital & Private Equity Association (CVCA),
points out, the concern was that another layer of
regulation would bring additional costs because
there wouldn’t be any reconciliation between
the two.
A need for clarity
China isn’t the only Asian jurisdiction where there
is a need for regulatory clarity, although in other
markets regulators are fighting to keep private
equity off their desks.
“If you ask the Financial Supervisory
Commission (FSC), they say it’s nothing to do
with them because it’s not public markets while
the Ministry of Economic Affairs applies the final
stamp but is just a coordinator,” says C.Y. Huang,
they are part of an industry that has grown
massively in the last decade, particularly in Asia.
By the end of 2012, more than 3,000 private
equity firms were active in the region, with $454
billion in funds under management. Ten years
ago less than half the number of firms controlled
about one fifth of the assets.
“Private equity has gone from almost nothing
to very sizeable,” says David Pierce, a partner of
FLAG Squadron Asia and non-executive chairman
of the Hong Kong Private Equity & Venture
Capital Association (HKVCA). “With greater
prominence, if you carry on trying to stay below
the radar, doing things as before, you risk being
regarded with suspicion. Most US PE people were
generally shocked at how the industry has been
characterized by the media. They see themselves
as good guys doing good things.”
With the lines still to be drawn by China’s
regulators, industry associations are preoccupied
with ensuring these lines don’t extend too far.
International players, meanwhile, are responding
“We are lobbying the Hong Kong government to
make some changes to tax and regulation – and
need to demonstrate to them that private equity
– John Levack
is a strategically important industry”
chairman and CEO of local GP FCC Partners and
chairman of the Taiwan M&A and Private Equity
Council (MAPECT). “PE firms run between these
agencies, asking who can help.”
The contrast is not rooted in ideology so
much as onshore versus offshore, and it runs
to the heart of the challenges facing Asia’s
collection of private equity markets. For the
likes of China and India, the question is how to
regulate the asset class on a domestic level in
order to protect investors who may not fully
understand it. For the rest, PE is more entrenched
yet faces unprecedented global regulatory
pressure.
These two extremes share a common origin.
Whether an individual manages renminbi raised
from high net worth individuals in China or US
dollars from pension funds in North America,
to regulatory blueprints that are already largely in
place in the US and Europe.
The Foreign Account Tax Compliance Act
(FATCA) has placed more onerous disclosure
requirements on managers who raise capital
from US-based investors above certain
thresholds. However, the EU’s Alternative
Investment Fund Managers Directive (AIFMD)
causes more concern. The worst case scenario for
Asia-focused managers is that they will have to
set up onshore structures in Europe in order to
market to investors in the region. This might fall
beyond the means of many smaller operators.
An acceptable middle ground is Asia
managers receiving a passport to operate in
the EU based on the credibility of their local
regulators – but what about those whose
offshore status means they aren’t tied to any
7
Cover Story
tim.burroughs@incisivemedia.com
particular authority? This question prompted
the HKVCA to action. “When AIFMD came out
in draft form a couple of years ago we engaged
the Hong Kong government to participate in
the process of seeking comment,” says Pierce. “I
believe it was the association’s first attempt to
influence and help the government understand
our industry. Before that we weren’t really on
their radar.”
Who regulates whom?
The association subsequently set up a dedicated
technical committee and reached out to local
regulators, to mixed effect. Although a number
of Hong Kong-based PE firms, wary of AIFMD
requirements, have chosen to register with
the Securities & Futures Commission (SFC), the
regulator’s response has been passive. Public
markets remain top priority and there is little
interest in PE funds are domiciled in the Cayman
Islands with nothing more than an advisory
presence in Hong Kong.
Private equity firms managing these funds
only fall within Hong Kong’s regulatory remit
if they are selling to local investors or if they
offer other financial products, such as hedge
funds, that already subject to oversight. On this
basis, half the HKVCA’s membership base is
unregulated.
“The reality is that many of the component
actions in private equity are regulated activities,
but may be exempt from the need to be
regulated here if you are advising a whollyowned parent that is established elsewhere,”
says John Levack, managing director of Electra
Partners and head of the association’s technical
committee. “The SFC is comfortable with that.”
As a result, funds that do register with the
SFC are subject to a form of regulation that
provides little insight into their operations.
Requirements include filing returns every six
months to confirm there is enough cash in the
coffers to cover employee salaries – a check more
relevant to brokerages than PE firms – and senior
professionals sitting exams on capital markets.
The concerns are twofold. First, European
authorities might examine Hong Kong’s
regulatory regime and decide that it is
insufficient for local managers to qualify for
the AIFMD passport system. Second, mainland
AVCPEC: Asia’s association
of associations
T
he first attempt at creating a pan-Asia private equity association came more than a decade
ago; it didn’t last. Fast forward to the present, the industry is larger and more globally
integrated – and, in the form of the Asia Venture Capital and Private Equity Council (AVCPEC),
there is a renewed effort to pool ideas and experience from across the region.
“We revived the idea two years ago,” says Johnny Chan, executive director of Crosby Asia
and president of the Hong Kong Private Equity and Venture Capital Association (HKVCA), who
is heavily involved in the initiative. “It really sprung from the idea that more of our members are
facing similar problems. There is a higher regulatory element that is being imposed or will be
imposed on the industry.”
AVCPEC’s membership comprises nine private equity associations – one each from Japan,
South Korea, Australia, India, Singapore and Hong Kong, and two from China. There has also been
interest from overseas, with Britain’s industry association (BVCA), participating in some of the early
exchanges.
According to Mark Florman, CEO of the BVCA, the association has agreements with 45
counterparts globally and looks to support developing nations in particular. “I’m not saying we
have the right solutions but our experience of arguing different cases and different models might
help,” Florman adds.
In its initial stages, AVCPEC is keeping the administrative duties to a minimum and trying
to serve as an association of associations – a B2B forum for sharing industry best practice. Not
everyone is drinking the kool-aid, though. Some industry participants note that it is difficult to
accommodate the needs of groups that represent industries at different stages of development.
Mahendra Swarup, a partner at Avigo Partners and president of the Indian Private Equity
& Venture Capital Association (IVCA), speaks up in defense of the council, observing that
coordinated support from regional counterparts makes it easier for the IVCA to approach the
government. “If the government hears from local associations and foreign associations it has more
impact,” he says.
8
Chinese PE firms that want to raise US dollardenominated capital might look to use Hong
Kong as a fundraising hub and apply for local
licenses, but ultimately opt for Singapore
because the regulatory environment is more
suitable.
Tax is an important consideration in this
respect. If a Hong Kong fund is regulated onshore
does that mean it could trigger permanent
establishment and no longer be ignored by
the tax authorities as an offshore entity? Given
that the authorities don’t tax capital gains, this
shouldn’t be a problem – but Hong Kong has
no legal definition of capital gains. Singapore,
meanwhile, has offered clarity.
“We are lobbying the Hong Kong government
to make some changes to tax and regulation –
and need to demonstrate to them that private
equity is a strategically important industry,” says
Levack. “We have asked Hong Kong University of
Science & Technology to look at the indirect jobs
that are created. These include many white-collar
jobs for graduates which are vital to Hong Kong.”
This kind of proactive advocacy is already
a hallmark of other industry associations’
approaches. The British Private Equity & Venture
Capital Association (BVCA) – which is older and
better resourced than its Asian brethren, and
deals with a broader range of issues throughout
Europe – seeks to influence UK economic and
industrial policy before it is made. This includes
identifying sectors in which member firms might
want to participate and making suggestions to
the government on how to facilitate investment.
“Our members own thousands of companies
in the UK and many of these companies are
overseas as well. We have to show that we are
part of national industries and that we have
a lot of dry powder which needs to be put to
work in British companies,” says Mark Florman,
the association’s CEO. He describes the BVCA as
having a “think-tank element,” with permanent
staff coming from policy and regulatory
backgrounds and offering a clear understanding
of how policymaking works.
Action by necessity
It is worth noting that this approach was in part
the product of necessity. While the BVCA still
has its critics, six years ago the association was
in a far worse position when a previous CEO
was pilloried by a House of Commons Treasury
committee inquiry and then savaged by his own
members for failing to defend the industry. The
association was essentially forced into a corner
and had to reconsider its engagement strategy
Comparisons can be drawn with certain Asian
jurisdictions in this respect. Several industry
associations that claim to have made progress
with domestic regulators can trace their efforts
avcj.com | February 05 2013 | Volume 26 | Number 06
Cover Story
tim.burroughs@incisivemedia.com
back to times when the industry was under
pressure.
The Australian Private Equity & Venture Capital
Association’s (AVCAL) advocacy efforts began in
2002 and the creation of venture capital limited
partnerships, but a greater challenge came five
years later when the Senate Standing Committee
on Economics investigated the asset class.
“It was after the Qantas bid [a PE consortium
tried to buy the carrier in 2006] so there was
a generally negative perception in the media
and in politics about the role of private equity,”
recalls Katherine Woodthorpe, CEO of AVCAL. “We
had to spend time with members of the senate
committee, but also every influencer – advisors
and representatives of both political parties.”
reasons that few in the industry could fathom.
The situation prompted MAPECT to intensify
its lobbying efforts. “We are trying to make the
government realize that this is a serious situation.
They say it is just one case but it isn’t: this one
case has damaged confidence of all PE investors
in Taiwan,” says Huang. “There is no certainty
regarding government approval and as a result
there have been no major PE transactions in
Taiwan in the last 2-3 years.”
The council’s concerns are threefold: that
the authorities are fundamentally opposed
to privatizations; that they are overprotective
of minority shareholders’ interests; and that
they don’t offer clear enough guidance on the
interpretation of regulations. It took the initiative
Then vs. now: Growth in Asian private equity
500,000
3,500
3,000
2,500
300,000
2,000
200,000
1,500
Firms
US$ million
400,000
1,000
100,000
500
0
2002
2012
2002
Assets
Assets (US$m)
2012
0
PE Firms
No. of firms
Source: AVCJ Research
More firefighting was required when the
Australian Tax Office retrospectively revised its
approach to taxing private equity profits and
industry participants required clarity. There has
also been the public fallout from a number of
leveraged buyouts struck prior to the global
financial crisis to contend with.
AVCAL’s proactive strategy has seen the
introduction of private equity primer seminars
for journalists and politicians. Last year 27
senior civil servants attended one of these
sessions in Canberra; a similar event was held
for government advisors several months ago.
“We start these sessions by placing a bunch of
different products on the table – brand names for
everything from skin creams to sportswear – and
people had no idea they are owned by private
equity,” Woodthorpe says.
Australia differs from most Asian markets in
that large leveraged buyouts of brand-name
businesses are available and they create more
waves in the public and political spheres. It is a
state of affairs with which Taiwan’s PE community
can sympathize after a KKR-backed management
buyout of electronic components manufacturer
Yageo was rejected by regulators in 2011 for
Number 06 | Volume 26 | February 05 2013 | avcj.com
with the Securities and Futures Bureau last year
and now has quarterly meetings with the agency.
Huang says this newfound engagement has
delivered progress, but the concerns have yet to
be fully addressed.
The other jurisdiction in which relations
between regulators and industry associations
have recently been formalized is India. Officials
at the Reserve Bank of India, the Securities and
Exchange Board of India (SEBI) and the Ministry
of Finance have each been tasked with handling
PE-related issues. Action came after the Indian
Private Equity & Venture Capital Association
(IVCA) stepped up its engagement in response to
particular regulatory issues.
In the past couple of years, the country’s
PE industry has faced uncertainty over the tax
treatment of offshore investment vehicles under
the now-postponed General Anti-Avoidance
Rules (GAAR); a wholesale reworking of the
classification requirements for onshore funds;
and withstood an attack by the Department of
Industrial Policy & Promotion (DIPP) on put and
call options used to secure private equity exits.
“The DIPP’s about-turn was entirely because
of the IVCA,” claims Mahendra Swarup, the
association’s president and a partner at Avigo
Partners. “With AIF, the outcome wasn’t 100%
satisfactory to everyone in the industry but
what emerged from the drafting process was
much better because of interaction with SEBI.
We have done a fairly good job in educating
the government on what the asset class does,
that we aren’t hot money and shouldn’t be
categorized with other types of funds.”
Horses for courses
Australia, Taiwan and India may stand out as
jurisdictions in which industry associations have
tried to draw or redraw their relationships with
regulators, but they are united by little else. The
success of their engagement, the number and
nature of stakeholders involved, the structure of
their industries and the economies in which they
operate, even the political systems of which the
regulators are part – all are different.
Consequently, while there are common
concerns regarding fundraising activity in Europe
and the US, there is no common solution at
local level. China, for example, has larger, more
independent-minded industry associations
representing GPs in the form of the CVCA and
the China Association of Private Equity, and then
a collection of groups led by regulators (the
NDRC created its own version of the CVCA to
counterbalance the CSRC-linked AMAC).
It is difficult to see consensus being reached
apart from in extreme circumstances, but
does that miss the point? Under the present
governance structures it is difficult to see
the advocacy process in China replicating
that of Western-oriented markets. “Lobbying
associations are useful – they mean your voice
gets heard,” says Vincent Huang, a partner at
Pantheon who is involved with the Limited
Partners Association of China. “As to whether we
can make a difference, this is more of a long-term
issue. I don’t think we are so powerful that can
change the government’s position.”
In the fullness of time, a more mature
private equity industry with a larger stake in
the economy as a whole may be in a position
to deliver sophisticated advocacy. There is also
likely to be greater appreciation of the need
to pre-empt the risk of a knee-jerk regulatory
response to a crisis. As other Asian jurisdictions
are discovering, this is easier to achieve when
government agencies, and indeed the public,
understand what the asset class does and how it
can contribute to industrial development.
“In the past in Hong Kong we were a small
industry, employing a relatively small number of
people and were not active in engaging with the
authorities,” says Johnny Chan, executive director
of Crosby Capital and president of the HKVCA.
“This approach doesn’t work anymore.”
9
Focus
andrew.woodman@incisivemedia.com
Tech crunch
On both sides of the Pacific, the venture capital industry is suffering from a dearth in Series A funding. How
widespread is the problem and who is most affected?
America’s venture capital
community has been preoccupied of late by
talk of a “Series A crunch,” whereby Silicon Valley
start-ups struggle to bridge the gap between
seed-stage funding and a second round of
institutional investment. Growth companies in
Asia find themselves in a similar position.
“Asia is a maturing market so a lot of the
money available has been at the seed stage,”
says Vinnie Lauria, co-founder of Golden Gate
Ventures, a Southeast Asia- focused start-up
accelerator based in the Singapore and Silicon
Valley. “Once portfolio companies need to do
a Series A round there aren’t a lot of people to
turn to.” He isn’t optimistic about entrepreneurs’
prospects over the next 18 months.
AVCJ Research supports the idea that Asia
could well be experiencing Series A crunch. Since
2010 the number of venture capital investments
under $3 million has increased by 20% to more
than 400 deals. At the same time, transactions
between $3-5 million, the traditional sweet-spot
for Series A, have dropped by 33% to fewer than
100. The contrast is so pronounced that in 2012
deals under $3 million where at their highest in
four years while those investments in the higher
bracket were at a four-year low.
“We have definitely seen it across Southeast
Asia,” confirms Frederic de Bure, a partner with
IDG Ventures in Singapore, which typically
targets Series A rounds. “Around 18 months ago,
you would see many more investors willing to
go into a Series A round with us, and they felt
comfortable taking that risk. But in the last nine
months we have seen a retrenchment in appetite
for guys who are traditionally Series A investors.”
De Bure blames this decline on greater
uncertainty at the broader macroeconomic level
compared to 6-9 months ago, which has put
pressure on GPs to take less risk.
Digestion problems
Another contributing factor is that there has
been so much investment at the seed stage
that there are simply more companies seeking
Series A funding than in the past. It comes as no
surprise that the need for early-stage institutional
support is most acute in the technology sector:
the computer and IT sectors accounted for 46%
of all sub-$3 million deals by value in 2012 and
43% by volume.
Number 06 | Volume 26 | February 05 2013 | avcj.com
“I think it is very simple,” says Chris Evdemon, a
partner with Beijing-based incubator Innovation
Works. “We had a couple of amazing years in
2009 and 2010, a once-in-a-decade opportunity
where we had the whole mobile internet sector
opening up. Every VC covering the China market
jumped onto it and it made for an over-heated
environment.”
Evdemon likens the drop off in the series
A investment to the the calm after the storm,
anticipating a rebound in investor confidence as
company valuations rationalize. “When put it in
context it is a very natural trend but if it is looked
at in isolation that’s people start to get worried,”
he adds.
means there is a disincentive for large early stage
investors when you consider the amount of time
required from the time of the initial investment
until you can take the company public.”
Into the breach?
So who is filling the gap in funding? One trend
has been for larger investments to be made at
the seed stage is through so-called “super angels,”
a relatively new addition to the Asian start-up
landscape. Jungle Ventures, which launched its
$10 million super angel fund last October, did so
with a to view supporting go-to market plans of
investee companies. But sometimes companies
need more than just cash.
Venture capital investment in Asia by size
2009
2010
2011
2012
0
200
Under $3 million
$5-10 million
400
600
$3-5 million
Over $10 million
800
1,000
No. of Deals
Source: AVCJ Research
The counterargument is that there is no
shortage of capital at all and would-be Series A
investors – in China, at least – are being put off
by the lack of a clear exit channel.
The US IPO market has been more or less
closed to Chinese listings, due to investor
suspicion of small- to mid-cap companies for
nearly two years. The bourses in Hong Kong
and mainland China offer little respite for tech
start-ups because listing candidates are expected
show several years of profitability. Even if the
profits are there, the waiting list for mainland
IPOs is long.
“It is a shortage of visibility of liquidity; you
simply can’t forecast the exit timing,” says Gary
Reischel, founder and managing partner with
Qiming Venture Partners in Shanghai. “This
“I suppose they can be one way of bridging
the gap and from a funding standpoint they
are sufficient,” says IDG’s de Bure. “But what they
don’t provide is the experience and knowledge
of a traditional venture capital fund. It is not just
about the money, it is the network they provide.”
The flip side is that the Series A crunch may
sober up Asia’s venture capital industry. While
there may be a return to early investment
euphoria as confidence recovers, some hope the
crunch may lead to greater restraint in future. “In
bad times you have to pull the belt tighter and
instead of doing ten investments, you may do
five,” says de Bure. “It just makes you focus on your
returns and mitigate the downside even more so
than in the past. It is not a bad thing from a fund
perspective.”
11
deal of the week
tim.burroughs@incisivemedia.com
CVC agrees Philippines’ biggest-ever buyout
The Philippines has supplanted India
in recent years to become the call center capital
of the world as its business process outsourcing
(BPO) sector recorded massive growth. Revenues
are expected to more than double in the next
five years, reaching $25 billion by 2016. In
addition to call centers services, the country
offers everything from HR and payroll processing
to financial accounting.
A host of global third-party BPO service
providers and multinationals’ in-house operations
have taken up residence in the Philippines, and
this was where CVC Capital Partners began its
search for potential acquisition targets. “There are
a lot of captive providers and we are looking for
the day when the in-house operations no longer
have to be 100% owned and could be carved
out,” Brian Hong, a senior managing director at
CVC, tells AVCJ.
However, the asset that became available
was entirely homegrown. SPi Global Holdings, a
subsidiary of Philippine Long Distance Telephone
Company (PLDT), dominates the call center
space as well as offering domain expertise in
the largest minority deals in the country when
healthcare and publishing. It primarily serves
it acquired a 15% stake in Rizal Commercial
US and Europe-based customers with close to
Banking Corp. for $115 million. Hong suggests
18,000 employees worldwide.
that the PE firm’s track record in the country
PLDT last year decided to sell an 80% stake in
helped facilitate the transaction.
the business as part of efforts to divest non-core
“If you are a global firm and you are trying to
assets. Several private equity firms expressed an
get someone to engage with you in a country
interest, but CVC felt it had an edge, given its
like the Philippines, the question is are you really
prior knowledge of the sector and relationships
going to get there and invest a
forged with company
large sum of money,” he says.
management before the auction
PLDT will retain a 20% interest
process began.
in SPi, which means it can
“We had a pretty good
participate in future growth of
understanding of the industry,”
the business. SPi posted revenues
says Hong. “We hoped they
of $170 million for the first nine
would do an exclusive deal with
months of 2012, up by 16%
us and, even though they ended
year-on-year, and had an EBITDA
up going for a process, it largely
BPO: Big in the Philippines
margin of over 20%. For CVC,
came down to who PLDT and
PLDT’s continued presence is a source of comfort.
management wanted to work with.”
“Our 20% partner is the second-largest listed
The deal values SPi at more than $300 million
company in the Philippines and they know
– with CVC’s commitment split equally between
the local market,” Hong says. “They are also a
equity and debt – making it comfortably the
customer on the call center side and a supplier in
largest buyout ever seen in the Philippines. Two
terms of telecom and data connectivity.”
years ago, CVC was also responsible for one of
Hahn & Co. in $130m bankruptcy buyout
which makes it hard for private equity firms
Sourcing deals through South
to enter this kind of process,” says Scott Hahn,
Korea’s bankruptcy courts is notoriously
CEO of Hahn & Co, the GP selected by the court
complicated, but even by these standards Korea
as preferred bidder for Korea Line. “It is a very
Line presented a challenge. The sale process was
domestic process.”
officially launched late afternoon on December
Hahn & Co. has previous experience in this
21, the Friday before what most people treated
area, having acquired Daehan Cement from
as a long weekend, given that Christmas Day
troubled Daehan Group for $65 million last year
fell on the following Tuesday. The deadline for
via bankruptcy proceedings. The private equity
submitting letters of interest was December 26,
firm began its homework on Korea Line before
with due diligence commencing on January 2.
the process began and so was
In all fairness, time was of
able to act quickly. Five parties
the essence. Korea Line, the
expressed an interest in the asset
country’s fourth-largest shipping
and this was whittled down to
company, entered bankruptcy
two, with Hahn & Co. winning out
and restructuring in early 2011
over a shipping finance company.
and the process was protracted
The enterprise value of the
by creditors waiting in vain for
transaction is KRW1.1 trillion ($1
evidence of a turnaround in
Korea Line: Distressed asset
billion), with the PE investor set to
the global freight market. As a
commit KRW140 billion in equity for its holding,
publicly-traded company, Korea Line was legally
pending creditor approval. It is comfortably
obliged to delist on March 31 if fresh capital
the biggest investment made by the Korean
couldn’t be found.
GP, whose team spun out from Morgan Stanley
“With a court receivership there are no
Private Equity Asia (MSPEA) in 2010 and raised
meetings with management before you invest,
12
$750 million for its debut fund the following year.
Korea Line has 32 vessels and $1.5 billion in
assets, trailing only Hanjin Shipping, Hyundai
Merchant Marine and STX Pan Ocean among
domestic carriers. It posted revenues of $600
million in 2011 and EBITDA of $190 million.
“This is a sector we have been looking at it for
a long time,” Hahn adds. “This company only does
bulk – it only imports raw materials that Korea
Inc requires. The business is not trade dependent
because South Korea has zero natural resources.
We are the number two importer of liquefied
natural gas, third for steaming coal, fourth for
crude oil and third for coking coal.”
Korea Line slipped up by overextending itself
during the pre-global financial crisis boom years
when the sector was at the peak of a super cycle.
The company deviated from its core strategy
and moved into ship chartering, taking vessels
on 3-4 year leases from Europe and hiring them
on a short-term basis, and at a higher margin,
to domestic shipping companies. When global
freight rates collapsed so did Korea Line’s
business model.
avcj.com | February 05 2013 | Volume 26 | Number 06
deal of the week / Funds
andrew.woodman@incisivemedia.com / tim.burroughs@incisivemedia.com
Everstone bets on India’s logistics space
commitment to TVS Logistics last year – and this
The fact that Dehli-based Transpole
goes some way to explaining the level of interest
is regarded one of India’s largest shipping
in the sector. According to AVCJ Research, India
logistics firms yet still accounts for around
is one of the most active countries in the region
3% of its market speaks volumes for the level
when it comes to transportation and distribution:
of fragmentation in the sector. Everstone
About one third of the $1.8 billion invested in the
Capital is betting on Transpole’s potential as a
consolidation play, paying INR2.2 billion for a near sector region-wide last year went to India.
The other attraction is growth. On a gross
25% stake of the company.
revenue basis, the value of India’s freight
“We essentially want to help the company
forwarding industry was
strengthen its trade links and
estimated at INR450 billion
logistics infrastructure, which
($ 8billion) in 2012, and it is
means setting up more offices
expected to reach INR750 billion
and infrastructure and building
by 2016.
the customer base,” explains
“We have always liked freight
Dhanpal Jhaveri, co-founder
forwarding logistics sector
and partner at Everstone. “We
because it is an asset light
will also assist Transpole in their
model,” says Jhaveri. “There are a
inorganic growth opportunities
lot of businesses in this industry
through acquisition of
Logistics: Fragmented sector
that are asset intensive, such as
businesses which we believe fit
shipping and trucking companies. What we like
well within the company’s core strategy.”
about the Transpole model is really that they are
Rival private equity firms are seeking similar
providing end-to-end logistics and they have the
outcomes with other companies – KKR offered
scale for a lot of efficiencies in the business.”
a similar investment rationale for its $47 million
Transpole’s services range from freight
forwarding to warehousing and distribution,
and it has built out a strong presence across
the region with 540 employees based in 18
offices in India as well as locations in Singapore,
Malaysia, Hong Kong, South Korea and China.
The company has achieved compound annual
growth of more than 60% over the last five years.
Jhaveri says the new funding will enable
Transpole to expand its operations in India and
overseas. He notes that there is opportunities are
increasing for such companies as customers seek
out more sophisticated forms of supply chain
management.
Everstone is not the first PE firm to
recognize the Transpole’s potential – Fidelity
Growth Partners invested $13.5 million two
years ago – and it moved fast to secure the
transaction, agreeing the invest five months after
identifying the company as a potential target.
The investment was made through Everstone
Partners II, a 2009 vintage vehicle which reached
its final close of $580 million in 2011 and is now
around 40% deployed.
Lightspeed nets $168m for China fund
Lightspeed Venture Partners’ China
fund has been more than seven years in the
making, having been under consideration ever
since the GP included an international allocation
– Asia and Israel, in addition to the US – in its
seventh global vehicle. The decision to proceed
was taken in 2010.
“The VC market is in a better place than in
2005-2006 and a dedicated fund makes sense,”
Ron Cao, co-founder and managing director of
Lightspeed China Partners, tells AVCJ. “When we
launched the fund in 2011 we were completing
the investment phase of global Fund VIII. We felt
that prior to raising our global Fund IX, it was the
right time to launch our China vehicle.”
The latest global fund closed last year at $675
million, down from the $800 million raised for its
predecessor in 2007. Lightspeed China Partners I
has now completed fundraising, beating its $150
million target to close at $168 million after about
14 months in the market.
The US parent is a significant LP in the China
fund and roughly half the investors are also
participants in the global vehicle. Cao notes that
Number 06 | Volume 26 | February 05 2013 | avcj.com
“You need to have the right fund size and the
there are more Asian, Middle East and European
right entrepreneurial operating background.
names on the LP roster for the China fund than
Entrepreneurs want more value-add than
for its global affiliate. The broader geographical
before. They realize that Series A isn’t just about
mix also means a stronger family office presence
maximizing the valuation but finding the right
– many of the Asian LPs fall into this category –
investment partner.”
alongside the pension funds, fund-of-funds and
Lightspeed’s previous China investments
endowments that feature prominently in the
have involved internet, mobile and technologyglobal fund.
enabled consumer and business services. These
Fund IX has no formal co-investment rights
industries will dominate the new fund’s portfolio
with the China vehicle but it will come in on
– it has already completed four
certain deals, typically later-stage
deals, including vacation rental
investments. The previous global
service provider Tujia.com and
fund deployed about 15% of its
internet-based financial services
corpus in the country.
search provider Rong360 – but
Lightspeed China Partners
Cao expects to see more activity
I is expected to invest in 15-18
in enterprise solutions as well.
companies over a three-and-a“We are spending a lot of time
half-year period, predominantly
looking at areas such as big data
on Series A transactions. Cao
Lightspeed: China-focused
and software as a service,” he says.
says the fund size was restricted
“Chinese companies are adopting technology
to within range of its $150 million target so this
faster than people think. They have to respond
investment thesis wouldn’t be overextended.
to labor costs getting higher so they leverage
“There aren’t many funds in China that really
technology to become more efficient.”
focus on early-stage Series A deals,” he explains.
13
Industry Q&A | Mukund Rajan
alvina.yuen@incisivemedia.com
Waiting for a rebound
India’s private equity industry has suffered criticism from disappointed LPs in the last couple of years. Mukund Rajan,
managing partner of Tata Opportunities Fund, identifies a few positives
Q: How does the Tata
Opportunities Fund fit into
Tata Capital’s overall strategy,
given that you also have other
specialist funds?
A: Private equity is a key focus
area for Tata Capital, which has
individual funds with distinct
mandates. Given the growth
trajectory of the Tata Group in
recent years, PE is emerging
as an important source of risk
capital. The Tata Opportunities
Fund will provide its investors an
alternative route to participate
in the group’s growth by
investing into or alongside Tata
companies. We have secured
commitments to the tune of
$600 million from LPs and made
have made investments to date
of roughly 20% of the fund,
which is in line with the pace we
expected.
Q: How important is the Tata
brand when deal sourcing?
A: The Tata brand is one of the
most trusted brands in India,
as well as a being recognized
globally. The group’s reputation
for good corporate governance
is synonymous with trust and
reliability, and that is reflected
in the confidence investors
have that their interests are
well protected and secure with
Tata. This has been a significant
differentiator for Tata-backed
funds when prospecting for
private equity opportunities.
Q: Foreign investors appear to
be bearish on India at present.
What do you see as the major
problems?
A: The Indian macro story suffered
a setback as a result of the
slowdown in the economy, as
well as doubts and negative
perceptions built up about the
14
“GPs need to identify clear exit
routes at the time of investment
and plan for multiple scenarios
that also factor in market volatility
– especially given public markets
do not offer easy exit routes at the
moment”
government’s commitment
to economic reform. However,
this is expected to change in
the wake of recent reformist
tendencies. Going forward, we
should see greater alignment
between the political agenda
and policy measures to address
India’s economic growth
potential. The other major issue
affecting foreign LPs’ perception
is the performance of Indian
funds. Their key concerns in this
regard include lower returns
on investments, corporate
governance deficits, insufficient
exits, and instability of teams.
Q: To what extent do you
consider potential exit
channels when investing?
A: Our first investment is only 20
months old, so we have not
yet exited any deals. However,
identifying exits is extremely
important, and we do consider
this at the time of investment.
Multiple exit routes are built into
our analyses, including IPOs,
trade sales, and sales to financial
investors and promoters. GPs
need to identify clear exit routes
at the time of investment and
plan for multiple scenarios that
also factor in market volatility.
There has been an explosion
in private equity investments
in India in the past five years,
but not every fund has been
sophisticated in its approach
to exits. As the industry
consolidates, I think there will be
greater discipline.
Q: Some Indian GPs are trying
to diversify their product
offerings. Why is this?
A: It is important to be flexible
on investment strategies in
India, given the uncertainties
and occasional volatility
witnessed in the economy and
the public markets, and also
the stiff competition amongst
funds for quality transactions.
Illustratively, some funds have
decided to assign a significant
portion of their portfolios
to PIPE deals. That said, we
would advocate identifying a
strategy that a GP feels it has
the skill sets to execute upon,
and working towards effective
implementation rather than
frequent changes in strategy.
Q: Tata is in the process of
launching a fund with Power
Finance Corp. How attractive is
India’s power sector?
A: India’s per capita power
consumption is about 700
kilowatt hours, almost onefourth that of China. Given a
much higher global average
and the increasing footprint of
India’s manufacturing industry,
the country will definitely
require more investment in this
sector – a need that was clearly
underlined by the nationwide
blackouts witnessed earlier this
year. The major concerns that
have impacted the sector are
the viability of the provincial
electricity boards which are
significant buyers of power, and
the availability and pricing of fuel
for utilities. Once these issues
are addressed, we can expect
to see an enormous amount of
investment in the sector.
Q: To what extent are valuations
still a concern for private
equity investors in India?
A: Valuations have moderated in
recent quarters in the wake of
depressed public markets, a
high interest rate environment
and more reasonable promoter
expectations. Valuations have
to be specific to an asset and
should not be generalized within
a sector. That said, we are looking
closely at sectors benefiting
from consumer discretionary
and sectors where India has
a comparative advantage
over other countries either in
manufacturing or in services.
avcj.com | February 05 2013 | Volume 26 | Number 06
Private Equity Data file | AVCJ research
AVCJresearch@incisivemedia.com
private equity in asia
Investment Breakdown by Country From 1 January to 31 January 2012
Amt. Invested US$m
No. of Deals
(Disc.)
No. of Investees
South Korea
Investee Country
887.8
10
10
10
Japan
494.7
8
6
8
Malaysia
299.3
2
2
2
Australia
276.5
7
4
7
India
228.1
19
15
19
Vietnam
200.0
1
1
1
China (PRC)
176.6
22
11
22
Hong Kong
112.0
4
2
4
Indonesia
35.0
2
1
2
Singapore
15.5
4
2
4
Maldives
-
2
-
2
Taiwan
-
4
-
4
fund-raising monitor
Closed Fund
Location:
Malaysia
Fund Name:
Creador I, LLC
Closing Amount:
US$132 million (final close)
Launch Date:
November 2011
Fund Manager/Advisor:
Creador Sdn. Bhd.
Stage Focus:
Buy-outs (MBO/MBI/LBO), Expansion/ Growth Capital, Mezzanine/ Pre-IPO, PIPE Financing, Privatization, Public to Private
Industry Focus:
Computer related, Consumer products/services, Electronics, Financial services, Information technology, Media, Medical, Retail/Wholesale,
Services – Non Financial, Telecommunications, Transportation/Distribution
Geographical Focus:
India, Indonesia, Malaysia
Contact:
Brahmal Vasudevan
Phone:
(60) 3-2182-6868
Email:
brahmal@creador.co
Website:
www.creador.co
Update:
Creador has held a final close of its maiden fund at US$132 million, below the original target US$350 million. The Fund aims to invest in SouthEast Asian countries like Indonesia and Malaysia, besides India.
New Funds
Location:
Japan
Fund Name:
Globis Fund IV, L.P.
Target Amount:
US$170 million
Launch Date:
January 2013
Fund Manager/Advisor:
Globis Capital Partners & Co.
Stage Focus:
Expansion/ Growth Capital, Mezzanine/ Pre-IPO, Start-up/ Early Stage
Industry Focus:
Computer related, Consumer products/services, Ecology, Electronics, Financial services, Information technology, Media, Retail/Wholesale,
Services - Non-Financial, Telecommunications
Geographical Focus:
Japan
Contact:
Yoshito Hori
Phone:
(81) 3-5275-3939
Email:
hori@globis.co.jp
Website:
www.globiscapital.co.jp
Update:
Globis Capital Partners is raising its fourth Japan fund, Globis Fund IV, at US$170 million. The Fund will invest in early stage startups and carve-out
businesses primarily in Japan.
Number 06 | Volume 26 | February 05 2013 | avcj.com
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