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Southeast Asia Beckons - investors are launching funds to target opportunities in SE Asia16/01/2008. Source: Asia Private Equity Review (APER).
 The 1997-1998 Asian Financial Crisis (‘Crisis’) has left a long shadow on the economic prospects of Southeast Asia. Until few years ago, it was a rather far-fetched idea to raise a multimillion dollar fund for any market in Southeast Asia. But investors are responding to the region’s economic boom.
In December, the Vietnambased Indochina Group announced the launch of a US$500 million infrastructure fund for the country. Significantly, this first infrastructure investment vehicle for the private equity firm, Indochina Infrastructure Holdings, will have a focus on socially responsible investing while providing finance to such projects. This is by far the most ambitious initiative in this sector that combines the dual mandates of seeking solid investment opportunities while supporting related social issues. To be managed by Indochina Capital, Indochina Infrastructure Holdings will also encompass the energy and cleantechnology sectors in its investment focus.
One of the pioneer fund management firms established during the first private equity boom in Vietnam in the mid 90’s, Indochina Group boasts a decade-long investment experience in Vietnam. The launch of Indochina Infrastructure Holdings coincides with the unveiling of a real estate initiative which will also have an identical target fund size. This real estate fund will be managed by the property investment division of Indochina Group, Indochina Land.
In 2007, Vietnam surpassed all other markets in Southeast Asian by recording an impressive US$1.69 billion of fresh capital (fig. 24).
Vietnam is one of the economies that is propelling Southeast Asia’s economic boom, and enticing investors to return to the market that was once battered by the Crisis. The ASEAN region as a whole has become increasingly attractive to savvy investors. The Indonesia-based Saratoga Capital recently announced the first closing of its second fund which has received institutional commitments to the tune of US$90 million. In addition to investing in Indonesia, Saratoga Asia II LP, with a target size of US$330 million, will also seek opportunities in the ASEAN region.
To the US-based Lombard Investments, Inc., which manages the US$245 million Thailand Equity Fund, its Southeast Asian focus has paid off. The private equity firm announced the final closing of its third private equity fund, Lombard Asia III, that secured over US$234.4 million from a prestigious list of investors including California Public Employees’ Retirement System and the UK-based CDC Group. The fund will deploy capital to those companies that would require between US$10 million to US$50 million of capital.
One of Lombard Investments’ most celebrated investments in Southeast Asia is the Bangkok-based Maritime Mermaid Pcl, which went public on the Singapore Securities Exchange Ltd. in the fourth quarter of 2007. Although the private equity firm, the earliest third party investor in the maritime services company, did not dispose of its holdings, it was able to book a return of over seven times, based on the company’s public offering price.
According to sources close to the fund management firm, Lombard Asia III has kindled the interest of a host of investors who are now waiting for the fund management’s next fund.
The combination of successful divestment stories and the burgeoning economic growth in Southeast Asia has been a powerful magnet to pull investors’ attention to this region. According to market sources, one Singapore-based management firm which boasts an illustrious divestment record for a number of Southeast- Asian based companies, is making plans to market its second ASEAN fund. After a decade in hibernation, the Southeast Asian economy is set to witness a mushrooming of funds before the end of the decade (fig. 25).
Asia Private Equity Review (APER) is the foremost voice on matters related to private equity/venture capital in the region. Well-recognised as being the singular source for accurate and timely news, in-depth analysis and global perspectives, APER is published by the Hong Kong-based Centre for Asia Private Equity Research. For further information please visit their website at www.asiape.com or email them at info@asiape.com
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