Turn Capital eyes more undervalued assets after Flash Coffee Thailand buyout

TURN Capital, the firm started by the co-founder of live-streaming operator 17Live, has raised its maiden fund to invest in business turnarounds in the consumer and technology sectors.

The fund’s first deal is a total buyout of the Thai unit of Flash Coffee, the venture-backed coffee chain that is undergoing consolidation across its markets. The deal size was undisclosed.

Turn Capital, founded in 2020 by Joseph Phua as a single family office investing in distressed assets, is looking to take controlling stakes in Asian companies, and to turn them around towards profit-breakeven within a year.

The firm is investing in opportunistic deals just as private valuations across Asia are tumbling, squeezed by rising interest rates and high inflation.

Ho Kheng Lian, general partner (GP) at Turn Capital, said: “Usually, these companies would have been over-invested into by venture capitalists, and would have plateaued to the extent that they’re not VC-investable anymore.”

The former restructuring and litigation lawyer, who has known Phua for about 20 years, said of these companies: “They hit a point when they’re running out of money, and that’s where we come in and turn them around, with the expertise that we have in the space.”

Ho, through her own firm Kollective Group, has also made tech investments and advised Vertex Ventures and other companies on fundraising.

Turn Capital is targeting a final close of its five-year fund by year-end.

Ho declined to reveal the firm’s fundraising target. The fund will have a GP commitment of at least US$10 million, at least 20 per cent of the entire fund, she said.

It will invest in three to five companies, typically in the Series B to D stage, and with around US$10 million in revenue. Turn Capital aims to find strategic investors within the first 18 months of an acquisition, to realise some of its initial investment.

The firm’s limited partners include family offices, business operators and venture capital GPs. They include Twitch co-founder Kevin Lin, Taiwan Mobile president Jamie Lin, and former AC Milan footballer Keisuke Honda, who has his own venture fund and earlier this year said he was eyeing South-east Asian startups.

Turn Capital had been tracking Flash Coffee’s business since April, before its Taiwan operations were wound up.

The partners decided not to invest then, but when news of the Singapore liquidation emerged, they restarted discussions with management to evaluate the company’s other markets.

Turn Capital was attracted to Thailand’s rising consumer middle class and Flash Coffee’s brand value. Thailand’s cheaper rental market, relative to the Singapore and Taiwan markets, also makes it easier for operators to manage costs.

Turn Capital GP Shang Koo, a former chief financial officer at 17Live, said: “When we look at the basic numbers for retail businesses, the biggest part is rent. If it’s low enough, you will make money no matter what – it’s hard to mess up when you pick the right locations.”

He led the US listings of luxury fashion company Lanvin Group and dating platform Jiayuan.com, which has since been privatised.

Flash Coffee has 46 stores in Thailand. Turn Capital plans to expand its network to more than 200 outlets in the next two years.

The firm’s other portfolio companies, outside its fund, include Next Apple, – a news site launched with 96 per cent of the original staff of Apple Daily (Taiwan) – and Taiwanese podcast platform SoundOn, for which an exit is expected in the next three to six months.