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CIMB's Nazir Razak said to plan US$1b Southeast Asia fund, based in Singapore

[KUALA LUMPUR] Nazir Razak, chairman of CIMB Group Holdings Bhd and brother of Malaysia's prime minister, is helping start a regional private equity fund that will seek as much as US$1 billion (S$1.36 billion), people with knowledge of the matter said.

Nazir will keep his role at CIMB, Malaysia's second-largest bank, while acting as one of the fund's five partners, according to the people. He will be joined by Kenny Kim, who previously worked under Nazir as chief financial officer of CIMB, the people said, asking not to be identified because the information is private.

David Heng, who recently resigned from his role as a senior managing director at Temasek Holdings, will also help direct investments at the new fund, the people said. A representative for Temasek said Heng will be leaving the Singapore state investment company at the end of this year to pursue other opportunities.

The fund, which isn't connected to CIMB, will be based in Singapore, according to one of the people. It plans to target investments in the consumer, technology, logistics and financial services industries in Southeast Asia, the person said.

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Private equity deals in Southeast Asia have more than doubled to US$37.4 billion this year, from US$16.4 billion during the same period in 2016, according to data compiled by Bloomberg. An investor group agreed in July to pay US$11.6 billion for Singapore warehouse operator Global Logistic Properties Ltd in Asia's biggest-ever buyout, the data show.

"Nazir is well-respected and has a good team with him," Danny Wong Teck Meng, chief executive officer of fund manager Areca Capital, said on Friday by phone. "Their local connections and understanding of the Southeast Asian business culture will give them an edge over other foreign funds. There are also better opportunities in this part of the world than elsewhere."

Gita Irawan Wirjawan, who was Indonesian trade minister under the country's last president, and former Philippine finance secretary Cesar Purisima will also be partners at the new fund, the people said. The five partners are planning to seek about US$700 million to US$1 billion from investors, according to one of the people.

Deliberations are at an early stage, and details could change, the people said. A spokeswoman for CIMB declined to comment. Nazir, 50, and the other four partners either said they have no comment or couldn't be reached for comment.

Southeast Asia has emerged as a strong manufacturing alternative to China, helped by lower labor costs, growing domestic demand and improvements in infrastructure. Gross domestic product in the Association of Southeast Asian Nations surged to US$2.6 trillion in 2016, about the size of the UK's economy, from a mere US$37.6 billion in 1970.

Growth in Asean is seen at 4.9 per cent next year, with Myanmar, Vietnam and the Philippines posting the fastest expansions in the region, according to BMI Research.