Coronavirus no damper for Southeast Asian private equity firms flush with US$8.7 billion in unspent cash
- While fundraising has been hit by Covid-19, these companies are sitting on a record amount of unspent capital, according to a report by Facebook and Bain
- Technology and health care firms are on their radar for investment, as are the next generation of the region’s start-ups
While private equity firms’ fundraising activities have been hit by the economic fallout of Covid-19, those in the industry say the pandemic has created opportunities for companies with deep pockets – particularly in Southeast Asia.
Singapore-based Ascent Capital Partners has its sights set on Myanmar, where it is looking for investments in tech, education and health care start-ups. The country of 53.7 million has gone from SIM cards costing more than US$2,000 on the black market during the military dictatorship’s rule until 2011, to 80 per cent of the population owning smartphones as of 2018.
Having worked with partners to invest a combined US$26 million in local internet service provider Frontiir in June, Ascent Capital has another US$70 million in its pockets. Founder and managing partner Lim Chong Chong said that as the adoption of technology in Myanmar was likely to accelerate, the company wanted to make another investment this year, and two to three more in the next 18 to 24 months – each of at least US$10 million.
“Education and health care … are the sectors where our discussions are the most advanced,” Lim said.
Private equity firms’ Asia-focused fundraising slumped 44 per cent year on year to US$13 billion in the first quarter of 2020 due to the pandemic, the lowest since the third quarter of 2013, according to a recent Reuters report referencing data from Preqin.
But these firms in Southeast Asia are also sitting on a record US$8.7 billion in unspent capital, Facebook and consulting firm Bain & Company said in a report released earlier this month.
Titled “Digital Consumers of Tomorrow, Here Today”, the report said the unspent cash was an opportunity for start-ups, emerging mid-sized companies, and “unicorns” – start-ups valued at more than US$1 billion – in the region.