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SEA Investment market trend #3 (1st September 2019 ~ 18th October 2019)

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 1. SEA: Fundraising by buyout, growth PE firms fail to match 2015 level

Fundraising for ASEAN-focused buyout and growth funds has weakened since the peak of 2015, with $0.8 billion being collected in the first six months of this year, as investors shifted their focus on the region’s venture capital (VC) activity. According to data service firm Preqin, the capital raised in the January-June period this year by three funds matched the total amount raised in all of 2018 across six funds. However, when compared to 2015’s high of $6.1 billion, the amount raked in by growth private equity (PE) firms has been significantly lower.


“Political uncertainty in some corners may be putting a brake on larger scale buyout investments,” said Ee Fai Kam, head of Asia research and operations at Preqin, while highlighting the cause of slowdown. “It remains to be seen whether domestic investors will turn to the asset class in greater numbers.” Meanwhile, paucity of exits in the region might also be a culprit. An earlier report by Bain & Company said that Southeast Asia was among several regions in Asia Pacific that witnessed a sharp decline in exit value in 2018 compared to the average of the 2013-17 period.

 VC sets new growth

Standing in stark contrast to PE fundraising, a lot of VC firms have raised capital, some even surpassing their initial target. Sample this: East Ventures recently made headlines when it raised its sixth fund at $75 million, doubling the initial target. Jungle Ventures, on the other hand, is understood to be on track to make a final close of $220 million in the coming months. It recently announced the first close at $175 million for its third vehicle.


At the same time, the aggregate value of Series B and C financings also increased from $0.6 billion to $1 billion. “This suggests that the existing financing gap is narrowing, and we should continue to see more capital going into such rounds in the future,” the report said.


Read more at:  Dealstreet Asia (


2.  Asia PE-VC Summit 2019: More and more LPs to co-invest with GPs in emerging markets

Co-investments by limited partners (LPs) with fund managers or general partners (GPs) in emerging markets are becoming more common and could even form a long-term trend, according to investors at our Asia PE-VC Summit 2019. Speaking during a panel discussion on the evolving LP-GP dynamics, Wai San Loke, managing director at Novo Tellus Capital Partners said, co-investment with the firm’s LPs was done on an ad-hoc basis for the first fund, but the terms with investors now include co-investing. 

“A lot of LPs are coming to these (emerging) markets to take the GP role. They’ve started to look at some of the assets to invest [into] directly,” added Ellen Li, managing director of Actis. Coming in as both LPs and co-investors, institutions are seeking different kinds of opportunities as well as ways to mitigate risks, she said. While some fund managers see co-investment activity from the LPs as increased competition in the market, Li said it will, in fact, improve liquidity and create a healthy ecosystem in emerging regions.


GPs are getting certain benefits out of co-investment programmes, one of which is having extended relationship building capacity with their LPs. “Our philosophy is ‘build to last’ (…) so it’s great to get the LPs comfortable with our future funds,” asserted Loke, from a GP perspective.


Why Southeast Asia?

“There are new opportunities in Southeast Asia as there are quite a lot of new GPs coming up, especially in the technology space,”


Dave Richards, co-founder and managing partner of Capria Ventures, added that many LPs who did not have the policy to invest in venture capital before now see it as an opportunity to invest in emerging markets.


“One particular area that we’re excited about in emerging markets is private consumption,” he said, citing data that in previous economic downturns, businesses addressing the private consumption in these markets were more resilient compared to the Western world.


Countries like Indonesia and Vietnam with low manufacturing costs, increased Chinese investments due to the One Belt One Road initiative, reconfiguration of the global supply chains, and emergence of several mega-funds are seen as some of the broad macro themes playing out in the region.  
Read more at: Dealstreet Asia (


3. IDG Capital leads $67m Series C in biotech firm HiFiBio Therapeutics

HiFiBio Therapeutics, an emerging multinational biotherapeutics company based in France, has raised $67 million in its Series C funding round led by new investor IDG Capital with participation from existing shareholder Sequoia Capital China.


It was completed 15 months after HiFiBio raised $37.5 million in a Series B financing co-led by Sequoia China and LYFE Capital. As part of the latest investment round, IDG Capital will be represented on the company’s Board of Directors by Tiger Hu.

Founded in 2013, HiFiBio seeks to combat diseases by mobilising the human immune system. It operates a drug discovery platform, CelliGO, which seeks to develop therapeutic antibodies and immune system modulators through single-B-cell screening, phenotyping, and analysis.

Liang Schweizer, the company’s president and CEO, said the fresh funding will be used to further advance HiFiBio’s unique single-cell platform and to develop its pipeline of antibody drugs. “The Series C funding is another strong validation of our ability to attract the attention from top investors such as IDG Capital, as well as a leading global biopharmaceutical strategic partner,” Schweizer said.


Last year, the company announced that it has entered into multiple antibody discovery collaborations with leading pharmaceutical companies. It currently has more than 50 full-time employees operating out of three facilities in the USA, France, and China.


In June, IDG Capital led the $100 million funding round in Chinese online healthcare platform Weimai. The platform offers appointment, distribution, maternal and child disease management, grading diagnosis and treatment as well as remote diagnosis, and medical records management services. 
Read more at: Dealstreet Asia (




1. Tencent said to near $500m investment in Hillhouse’s healthcare arm

Chinese tech powerhouse Tencent Holdings, which in recent years has taken stakes in hundreds of companies worldwide, is continuing its shopping spree with a planned $500 million investment in Hillhouse Capital’s retail pharmacy business.


The transaction would put a valuation of $2.5 billion on the Asia-focused private equity firm’s health care arm, according to a person with direct knowledge of the matter. The deal, which has not yet closed, also reflects Tencent’s efforts to diversify from its core entertainment businesses, where growth has softened amid China’s economic downturn and stricter government oversight.


In recent years, Tencent has developed an artificial intelligence program that assists doctors in reading medical scans and making diagnoses for diseases, such as esophagus cancer. It also has poured money into health care app WeDoctor and invested in Hangzhou, China-based DXY, a medical information platform similar to WebMD of the U.S. The Shenzhen-based company, the No. 1 gaming publisher in China and owner of widely popular instant messaging app WeChat with 1.1 billion users, has been seeking growth outside of its entertainment businesses.


“Tencent’s mission is to become a digital assistant of all industries,” Martin Lau, Tencent’s president, said in September 2018 when announcing the company’s first restructuring in six years. Hong Kong-listed Tencent had revenue of nearly 89 billion yuan ($12.5 billion) in this year’s April-June quarter, missing analysts’ expectations.


The deal, first reported by The Information, would inject additional financial resources into Hillhouse, which is known for its investments in Tencent and Chinese search engine giant Baidu. The person familiar with the matter said that while Cowell Health — Hillhouse’s health care arm — is profitable, the new funding is expected to boost its presence in China through more mergers and acquisitions. Cowell’s retail drugstore business alone generated 20 billion yuan in revenue last year, this person said. Hillhouse so far has invested at least $1 billion to acquire more than 60 retail pharmacy operators with over 10,000 stores. Analysts and investors expect a booming market for China’s health care sector, given its rapidly aging population. Health expenditures are expected to more than double in seven years, from 3.2 trillion yuan in 2013 to 6.7 trillion yuan by 2020, according to Deloitte estimate. 

Read more at: Dealstreet asia (


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