Only five SE Asia-focused venture capital funds reached a final close in the first semester of 2024, a sharp drop from 17 in H2 2023 and just a third of the H1 2023 tally, as limited partners adopt a cautious approach, according to DealStreetAsia – DATA VANTAGE’s latest report, SE Asia’s VC Funds: H1 2024 Review.
Fundraising headwinds caught up with SE Asian VCs in the first half of this year, resulting in a decline in both the number of fund closes and the total capital raised. The fundraising experience was particularly arduous for first-time managers, per the report.
The week saw the release of another report by DATA VANTAGE on the Q2 funding performance in Greater China. After a strong Q1, fundraising by Greater China startups plunged in April-June (Q2) 2024 to levels seen during the COVID-19 pandemic in 2020—a sign of low confidence among private market investors.
Greater China startups raised just $9 billion in Q2, down 54.9% QoQ. Deal volume declined by 14.6% from the previous quarter to 525, signalling an active market but with more deals of smaller sizes, per Greater China Deal Review: Q2 2024.
As global investors remain cautious about new capital deployments, Chinese state-backed investors have stepped in to back more homegrown startups. However, that was not enough to offset the retreat of foreign capital, resulting in a significant drop in mega deals.
Let’s move on to the other headlines that dominated this week.
LP-GP news
In The LP View, we examined how global investors are increasingly looking at Asia’s maturing private credit market, thanks to the presence of established fund managers and strong asset performance. As vintages mature and volumes increase, larger secondary deals in Asia’s private credit market can be expected, said Kulbhushan Kalia, Senior Portfolio Manager, Global Private Debt, Allianz Global Investors.
Southeast Asia-based LPs, the biggest proportion of which is constituted by family offices, are allocating more to private assets, according to a Preqin report. The number of family offices in Southeast Asia has grown to a third of the total investors as of June 2024 from a fifth in 2020.
In terms of LP commitments, IFC is considering a $65-million equity investment in the third private credit fund of Singapore-based Orion Capital. The fund has a target fund size of $400-500 million and will provide senior secured loans to small- to mid-market companies across the Asia Pacific region.
Indian early-stage investor Ankur Capital has received commitments from two of its existing limited partners for its third fund, which has a target corpus of $150 million. British International Investment (BII) and the John D. and Catherine T. MacArthur Foundation have made subsequent commitments to the vehicle.
KKR has raised $808 million so far for its latest private credit fund dedicated to the Asia-Pacific region. While the total fundraising target for the latest fund is not known, KKR closed its debut fund in the franchise at $1.1 billion in 2022.
SE Asian VCs Intudo Ventures and Monk’s Hill Ventures are said to be gauging investor interest for their respective fourth funds even as the overall fundraising market remains challenging and venture capital firms face longer fundraising cycles.
Chinese technology-focused fund management firm CAS Investment has reached the first close of a new RMB fund series to invest in disruptive startups in AI, cleantech, and biotech.
Australian alternative asset manager MA Financial is launching a $675-million real estate investment vehicle with support from Warburg Pincus.
Dreame Technology, a Chinese maker of smart cleaning appliances, has set up its corporate venture capital arm, starting with two venture funds to invest up to $1.54 billion in the AI and robotics space.
India’s Good Capital is on track to close its second fund at $40 million next month. The second fund has already invested in eight companies including Nuuk, Babynama and Better Place Health.
360 ONE Asset Management, formerly known as IIFL Asset Management Ltd, has raised $500 million for its first secondary fund.
From the India desk
Neo Asset Management, part of wealth management startup Neo Group, is in talks to acquire stakes in a few portfolio companies of Peak XV Partners, including beauty retailer Purplle, health tech firm HealthKart, skincare startup brand Minimalist, and online car search venture CarDekho.
Indian food delivery platform Zomato’s acquisition of Paytm’s entertainment ticketing business for $244 million will strengthen its ‘going out’ segment while enabling Paytm to concentrate on its core financial services. Zomato plans to spin off the business into a new app called District.
Driven by heightened awareness of physical appearance and rising disposable incomes, India’s beauty and personal care sector is undergoing a remarkable transformation and investors are taking note. Nearly 17 beauty startups have garnered $259 million in funding so far this year compared to 18 startups raising $222 million in the whole of 2023.
Even as the deal flow continues to be sluggish in India amid macro market headwinds, a pickup in exits has offered much-needed relief to fund managers pumping capital into the startup ecosystem. In terms of value, PE and VC investors encashed $12.6 billion in the January-July period this year, up slightly compared to the same period last year, Venture Intelligence data shows.
The week saw multiple market transactions where investors offloaded stakes in listed firms. General Atlantic has sold its entire stake worth $127.40 million in India’s PNB Housing Finance.
A Warburg Pincus affiliate will sell 2.36% of its stake in Kalyan Jewellers for $155 million to another large stakeholder. The US PE firm held a 9.2% stake in Kalyan Jewellers as of the quarter ending June.
Meanwhile, Alibaba Group’s Antfin Singapore sold shares worth $570 million in Zomato, cutting its stake by nearly half in the food and grocery delivery platform. The sale marks Antfin’s second such divestment in the company this year.
Deal news
Singapore-based personal finance startup MoneySmart Group rejected a takeover bid from Nasdaq-listed rival MoneyHero on Friday, hours after the latter announced the offer.
Digital bank and credit payment startup Finture has raised nearly $30 million in a Series B round of financing, as it looks to ramp up forays into new markets including Hong Kong in the next few years.
EQT is investing in Australian SaaS company Compass through its BPEA EQT Mid Market Growth Partnership, which held its final close at $1.6 billion in May this year.
Manuva, an Indonesia-based manufacturing and supply chain platform, has raised fresh funding from Journey Capital Partners and other investors, according to regulatory filings.
Analysis and deep dives
The proposed acquisition of NYSE-listed PropertyGuru by EQT has been billed as a move that offers a premium to its private equity sponsors, TPG and KKR. However, it might also have saved the Southeast Asian real estate classifieds firm from further declining in an unfavourable public market.
Asian fund managers are finally realising that gender parity is no longer just an ESG checkbox but a magnet for investor capital and a driver of better returns, according to Daniel Oehling, Managing Director & Partner at Boston Consulting Group. “On a portfolio level, Asia-based GPs are slowly but surely waking up to the fact that there’s a true value creation,” he said.
Regional PE firms are selling their SE Asian portfolios back to the original owners after sale efforts to new suitors failed due to a mismatch in valuation and return expectations amid weak exit conditions. Promoter buybacks as an exit route are becoming more common in the region where family-owned companies dominate the overall business activities.
The Asia PE-VC Summit 2024 is less than a month away. We have lined up close to 100 of the region’s top investors, dealmakers, and startup leaders well-versed in operating in Asia’s diverse markets. We hope to see you there!
