Singapore remains Asia’s private-markets hub, but regional rivals are catching up: panellists

[SINGAPORE] Singapore remains the regional headquarters for many funds and startups, but other markets are catching up, with competition intensifying in Asia, said panellists at private-markets conference SuperReturn Asia on Monday (Sep 28).

While key investment functions remain concentrated in Singapore, expertise is no longer limited to the Republic and is increasingly spreading across the region, they said during the panel at the Marina Bay Sands Expo and Convention Centre.

“As Singapore is gaining prominence, you can also see local ecosystems in different countries are developing at a different pace,” said Hero Choudhary, founder and CEO of Accelerate Capital and managing partner of venture capital firm BEENEXT.

Vinnie Lauria, founding partner of Singapore-headquartered Golden Gate Ventures, pointed to talent, ease of doing business, and Singapore’s international reputation as key draws.

Meanwhile, Kuo-Yi Lim, managing partner at early-stage-focused South-east Asia venture fund Monk’s Hill Ventures, described Singapore as a “great” base for funds to operate across the region and other Asian markets.

He noted that Singapore has built a robust ecosystem spanning investment professionals, fund administration, legal services, compliance and tax.

Eric See, partner at Capritaur Ventures, a venture debt and private-credit-focused firm, similarly said that Singapore remains the firm’s regional centre, largely because of its supporting infrastructure.

Regional competition intensifies

But other Asian markets have developed considerably over the past decade, said See, adding that Japan, India and Malaysia are catching up with Singapore in terms of fundraising and talent.

Notably, he said that Japan and India emerged as leading fundraising destinations last year, while Indonesia and Malaysia also attracted strong investment within South-east Asia.

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Lim said that while Singapore remains a centre for top-notch professional services, these capabilities are starting to be found elsewhere.

“Increasingly, (we are) now looking at places like Vietnam and Indonesia to provide some level of support because that skill set now has diffused across the region,” he observed.

Panellists pointed out that investing is still very local, making on-the-ground experience important.

Lauria noted that investment remained highly local, requiring firms to build teams and expertise in individual markets.

“You can never see yourself (as) better than any country expert,” said See, adding that Singapore’s investors should take a regional approach, balancing what to deploy across countries.

For fund managers, staying competitive means remaining relevant to investors, See said, citing tenacity, resilience and nimbleness as key differentiators.

From macro to thematic

Panellists agreed that investing strategies in the region have become more thematic rather than macro-driven.

Lim said that the investment thesis for South-east Asia over the past few years focused on middle-class growth and digitalisation. While those trends remain intact, investors are increasingly focused on individual sectors.

“The shift is now towards more thematics, whether it is energy, semiconductors, tech (and) defence,” he said.

Lauria said that geography also shapes investment themes. In Vietnam, Golden Gate Venture invests heavily in businesses with an offline component, while its Singapore investments focus on artificial intelligence.

Meanwhile, Lim said Monk’s Hill focuses on special situations involving the restructuring of companies’ capitalisation tables.

Investments from the post-Covid period, he said, are overvalued and face “some reckoning”.

“But at the same time, the companies are prime for growth and acceleration, and that is where capital is needed.”

See highlighted fintech, special situations and the energy transition as areas of interest, although he noted that Capritaur would avoid over-concentrating its portfolios in any one sector.

Exits remain a challenge

Despite Singapore’s strengths as a private-markets hub, exit opportunities remain a challenge for investors in the region.

Lauria said that capital controls remain significant in parts of South-east Asia, making a Singapore holding company easier in facilitating transactions between buyers and sellers.

Lim said Singapore and the wider region are not seeing “much action” in growth-stage initial public offerings.

“For there to be (an) exit, there needs to be (an) entry point of capital,” he said, citing Grab’s recent move to acquire a controlling stake in buy now, pay later platform Atome as an example.

Lim also pointed to the Monetary Authority of Singapore’s Equity Market Development Programme, which aims to channel more capital into Singapore equities through asset managers and improve liquidity.

He hopes that greater liquidity will lead to more exits and allow capital to be recycled back into the market, driving returns back to investors.

The panellists nevertheless remained positive about Singapore’s prospects amid global uncertainties.

“Singapore remains, I think, one of the more attractive places to be. And particularly in this time of unpredictable geopolitics and situations, Singapore becomes even more compelling,” said Lim.