Venture capital fundraising in Asean is on course to match 2018 record

Singapore

ASEAN-focused venture capital (VC) fund-raising is on course to match the record figures reached last year, even as buyout deal values are falling amid a challenging macroeconomic environment, said Preqin, a data source on alternative assets.

Six funds have closed in the first half of this year, raising a total of US$0.5 billion, close to the amount raised in the first half of last year.

By year's end last year, a record 17 Asean-focused VC funds had achieved a final close, securing an aggregate US$0.9 billion.

It is also worth noting that while investors continue to show a strong appetite for early-stage startup funds - the share of funds raised through them rose from 21 per cent in 2017 to 29 per cent last year - the aggregate value of Series B and C financings went up from US$0.6 billion to US$1 billion over the same period.

Preqin noted in its report that this suggests that the existing financing gap is narrowing, and more capital is likely to go into such rounds in the future.

In terms of deal activity in Asean markets, there have been 222 VC deals worth US$3.4 billion since the start of the year. Singapore generated US$2.4 billion in VC deals, up from US$1.3 billion in H1 last year.

Recent large deals include the US$1.5 billion acquisition of Singapore-based Bigo Technology in March by China-based YY. Founded in 2014, Bigo Technology operates a portfolio of video broadcast services, including a live-streaming app; YY is a Nasdaq-listed live-streaming social media platform.

Ee Fai Kam, Preqin's head of Asia research and operations, said private equity and VC investors are clearly starting to take an increased interest in the region.

But the "fractured" regulatory environment - described by investors as "diverse", "fragmented", and "segmented" - could pose a challenge for investment.

"Alongside that, political uncertainty in some corners may be putting the brakes on larger-scale buyout investment, and it remains to be seen whether domestic investors will turn to the asset class in greater numbers," he said.

Buyout and growth funds have together collected US$0.8 billion in the first half of this year. While this matches the total amount raised in all of 2018, it is a large step-down from a peak of US$6.1 billion in 2015.

As of June 2019, there were 19 Asean-focused buyout and growth funds in market, collectively seeking US$3.6 billion in investor commitments.

Buyout-backed deal-making has slowed down this year - just 20 deals worth a combined US$0.4 billion have been announced.

A total of 67 deals were announced in 2018 for a collective US$3.6 billion.

Total deal value in Indonesia is edging just ahead of Singapore's total for the first time. So far in the first half of this year, Indonesia has clocked US$0.2 billion in private equity-backed buyout deals - versus US$0.16 billion in Singapore.

For more Asean-related stories, visit aseanbusiness.sg, the go-to portal for business guides, information and resources by The Business Times.