KKR declined to take part in this story but it did confirm that it is “looking at the opportunities” in Southeast Asia. Contrary to what we see in deal terms, these private equity firms are scouting for opportunities far earlier than when startups seek Series C investments. TPG Capital, KKR and others are seeking out opportunities and connecting with startups as early as Series A to get on their radar. That’s not a time that they’d invest, but it shows a keenness to seek out potential star companies and founders well in advance in order to beat rivals to it.
A Discussion of How Interests in Private Markets are Becoming a Driving Factor For Asian VC’s
“In order to get access to deals, they are starting to consider selectively smaller cheques,” a prominent Southeast Asia founder who had held conversations with one of the private equity firms told us. “Historically, they have been more Series C [rounds] with $200 million-plus but now they are coming down a little bit.”
PropertyGuru, a Singapore-based online property startup, has been a beneficiary of that interest. It raised $144 million from KKR in 2017, having welcomed TPG Growth to its cap table with a $130 million investment in 2015. The founder quoted above said TPG spent two years wooing PropertyGuru, while KKR beat off interest from no fewer than 10 other investors to land its deal. That capital gave the startup fuel to grow significantly, and it is tipped to head to public markets after an initial effort to do so collapsed last year.
The matter of exits
With money increasingly piling into promising companies, it’s logical to cast an eye over exit opportunities, which have not yet picked up at the same pace.
Notable early success stories include Sea, where Nash held a central role, and gaming hardware firm Razer, which listed in Hong Kong in 2018. Other exits in Southeast Asia have been of a smaller scale—Gojek has made over a dozen acquisitions, for example. Numerous venture capital firms have also returned cash through secondary sales, which amount to selling part, or all, of their holdings in a startup to a new investor at a higher valuation than they bought at.
Australia’s stock exchange (ASX) has been a popular destination for some early-stage Southeast Asian tech startups, but those at scale have found it a challenge. A stalled listing attempt from PropertyGuru, which we wrote about in December, and the ongoing trials of iFlix, which has postponed a proposed listing, demonstrate the increased difficulty of making it to public markets as a more mature business.
Despite that, investors are bullish on the IPO potential for Southeast Asian companies over a longer-term window. The rise of the Hong Kong Stock Exchange (HKEX) is, in particular, seen to have potential since it has hosted a secondary listing for Alibaba, which raised over $11 billion, and significant floats for Tencent subsidiary China Literature, Razer, and others.
Southeast Asia appears to be in its focus with HKEX becoming increasingly “more aggressive” with its efforts to seek out tech companies from the region that could be IPO candidates, said Golden Gate Venture’s Lints.