Temasek aims to invest in a few more Asean 'aspiring unicorns' by year-end; Vietnam a key market
TEMASEK Holdings is actively focused on "aspiring unicorns" out of South-east Asia, and expects to announce a couple of deals in the pipeline in the next few months, its senior executive told The Business Times on Thursday.
These deals come as the Singapore investment firm has spent the last 12 months making a few investments in that space. They include fashion startup Zilingo, which raised a total of US$226 million in February from Temasek and existing backers such as venture capital firm Sequoia Capital. More recently in September, Temasek was one of the firms leading the US$40 million funding round for Indonesia's beauty platform Social Bella.
In its e-Conomy 2019 report - an annual research project done by Temasek, Google and Bain & Company - Temasek found that nearly 70 companies are valued between US$100 million and US$1 billion in South-east Asia.
"There are a couple more in the pipeline, which I'd be surprised if we don't announce in the next few months," said Rohit Sipahimalani, joint head of the portfolio strategy and risk group at Temasek in an interview.
He added that Vietnam is one market that Temasek has been looking at "quite closely", while Temasek will continue to look at Singapore-incorporated companies that are regional or global players, as well as the Indonesian market.
These "aspiring unicorns" absorbed about US$1.1 billion in funding in the first half of 2019, surpassing the US$900 million raised in the same period a year ago, the e-Conomy 2019 report showed. Since 2016, they have raised US$5 billion.
But by comparison, unicorns - that is, companies valued at more than US$1 billion - have continued to dominate where funding is concerned. Since 2016, heavyweight tech firms such as Grab and Tokopedia drew US$23.7 billion of the total US$35.8 billion raised by startups in the region.
Given the great flush of capital chasing the unicorns, Temasek sees more sane valuations in the "aspiring unicorns" space.
"The natural tendency is to say, 'let's back the winners, because they have a long runway'. The unicorns will have two-thirds of the funding, and I think that will continue to be the case," said Mr Sipahimalani.
"We find this to be one of most interesting segments to focus on right now, because they've already got established business models," he added, referring to this "aspiring unicorns".
"There are a few winners in that space, but they still do not get the attention that the unicorns do."
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