Issue 4

AUM in Asia-Pacific to almost double to $29.6t by 2025: PwC report

The assets under management (AUM) in Asia-Pacific is set to almost double to $29.6 trillion by 2025, and Asia will be one of the largest infrastructure investment regions globally, according to a report released by PwC on Tuesday. 

According to the PwC report ‘Asset and Wealth Management 2025: The Asia Awakening’, APAC AUM will grow at a total compound annual growth rate (CAGR) of 8.7 per cent to $16.9 trillion in 2020 from $15.1 trillion in 2017. 

The 2025 target would be achieved provided protectionism remains limited and geopolitical activity remains relatively sanguine. In particular, retail or mutual funds including exchange-traded funds estimated AUM is expected to more than double to $11.9 trillion. 

Meanwhile, alternative asset popularity among Asian investors is also expected to boom from $2 trillion in 2017 to $6.9 trillion by 2025, especially in real estate and infrastructure investments. The burgeoning wealth of the mass affluent and high-net worth individuals in the APAC region also provide opportunities for asset managers to service these growing segments, propelling huge growth in the asset wealth management (AWM) industry and far outpacing the more developed regions of Europe and North America, the report said. 

The current asset management hubs of the region, Singapore and Hong Kong, will be joined by a third, namely Shanghai, it added. Meanwhile, the growth in Asia will be driven by the massive growth expected from the China’s Belt and Road Initiative (BRI) and other initiatives across the region. Justin Ong, Asia-Pacific Asset & Wealth Management Leader said: “APAC investors tend to be more active and focused on returns, and are prepared to take risks to reach their targeted returns. Passive products therefore might not provide the incentives they are looking for.” 

“However, the introduction of robo advisers and more digitalised fund advice will play a large role in paving the way for passive growth in the region, opening up new distribution channels and disintermediating current ones. This new order will further be bolstered as pension reforms in countries such as China continue, allowing pensions to invest in passive assets and sharply driving APAC AuM from 12% in 2017 to 17% in 2025.” 

According to the report, active strategies are losing ground to passive strategies as their lower cost is attractive to many investors. While popular in more developed markets such as Europe and the US, passive strategies remain mainly an institutional play in Asia. Venture capital is one of the fastest growing opportunities in APAC. 

In terms of deals, the region ranks just below the US, with China leading the market and accounting for five of the top ten largest VC investments at the end of 2017. Regionally, this shift towards transparency surrounding fees and services, coupled with younger, tech-savvy investors turning to lower cost alternatives such as robo advisors are set to increase pressure on fees and decrease margins. 

“Going forward, asset and wealth managers that achieve success will be those that beat the market. As new investors enter the market, the industry will become increasingly digitalised, and investors will look to managers who can tailor portfolios to their needs. Firms will need to combat fee pressure by reducing costs and gaining new investors,” Ong said. 

“As such, asset and wealth managers should reorganise their business structure to support their priorities and specific capabilities and cut costs elsewhere. Firms must also embrace technology and nurture and retain talent as the industry reinvents itself to reflect its widening customer base,” he added.

From – Deal Street Asia


Thailand approves merger of telcos TOT and CAT

The State Enterprise Policy Committee has approved the merger of Thailand’s state-run telecom companies, TOT Plc and CAT Telecom. 

Monchai Noosong, president of TOT, told Prachachart’s website that the merger is expected to complete in June and it should take a few more years to complete the business restructuring. It previously planned to split both companies into two new companies, but the labour unions were strongly opposed to it. 

The committee, therefore, considered merging them into a single entity and renamed it as National Telecom Company that is 100 per cent owned by the Finance Ministry. After the merger, the new entity will operate five core businesses which are infrastructure unit, international telecommunication unit, fixed-broadband and fixed-line telephone, mobile network and digital solution service. 

Meanwhile, the State Enterprise Policy Office announced plans to divest 72 privately owned companies which it holds less than 50 per cent by putting 18 non-listed securities on sale, the Bangkok Post reported, attributing it to sources. 

The Finance Ministry currently holds shares in 109 listed and unlisted companies with a combined market value of 1.15 trillion baht and a book value of over 800 billion baht, according to Sepo data in 2017. Of this, 89 are non-listed and 20 are listed companies.

From – Deal Street Asia

Smart city-focused venture funds worth $160m launched in Singapore

Smart city-focused venture capital funds worth $160 million have been launched in Singapore, underscoring the growing investor interest in the sector. 

The funds are Singapore-based GBCI Ventures’ $100-million smart city fund and CleanGrid Partners’ $60-million clean energy fund. GBCI Ventures’ first smart city fund will cover robotics, artificial intelligence, big data, Internet of Things (IoT) and virtual reality. 

According to local reports, its limited partners include corporates, family offices and high net worth individuals. The VC is also reportedly in talks with 50 startups and aims to provide them with technology access and go-to-market support. CleanGrid Partners has been formed by WEnergy Global, ICMG Partners and Greenway Grid Global. 

WEnergy Global is a Singapore-based company which focuses on clean electrification projects in Southeast Asia, while ICMG Partners is a management consulting firm with offices in Singapore, Tokyo, Shanghai and Silicon Valley. 

Greenway Grid Global is backed by Tokyo Electric Power Company PowerGrid Inc (TEPCO PowerGrid) and invests in microgrid projects in Southeast Asia. CleanGrid Partners fund aims to build a portfolio of electrification projects valued at $100 million within three to four years. 

The fund will also finance renewable energy projects in Southeast Asia. According to an official statement, $20 million from this fund is currently available for short term deployment. 

WEnergy Global has already begun investing in a microgrid project the in Philippines’ Palawan as part of its electrification plan. Several other projects in the Philippines, Indonesia and Myanmar are also in the pipeline. 

Gen Funahashi, Director of ICMG Partners, said: “We believe that investors, development and commercial banks and technology manufacturers worldwide must address the challenge to electrify the one billion people on our planet who have no or little access to electricity – of which over 100 million people live in Southeast Asia. 

We can make an impact by leveraging on the best available intellectual capital and transforming the management mindset of companies and governments to bring innovative clean energy solutions to this part of the world”. 

The Singapore government has taken on an ambitious mandate to transform the city under its Smart Nation Initiative that covers areas such as payments, mobility and big data. The Smart Nation Drive, however, has not gone without its share of blunders. 

SingHealth, the city-state’s largest health institution, suffered a major cyber breach last year, resulting in over 1.5 million stolen health records. The incident prompted a nationwide debate about the drawbacks of the initiative.

From – Deal Street Asia

Myanmar: China’s CITIC Construction, MAPCO to establish $500m agri venture

Beijing-based CITIC Construction, subsidiary of CITIC Group and Myanmar’s Myanmar Agribusiness Public Corporation (MAPCO) will invest up to $500 million into establishing high-end rice mills and agri-business service centers across the country, a top executive of MAPCO said. 

MAPCO and CITIC have been in advanced talks in establishing a rice sector-focused entity, Myanmar China Rice Industry (MCRI), a $100 million investment for high-end rice mills in areas like Twante township in Yangon region, Nay Pyi Taw, Kyauk Taw in Rakhine state and Kyeik Latt or Myaung Mya township in Ayeyarwaddy Region. 

“The project will also help the border trade. The establishment of the high-end rice mills will boost both the local and export market and we expect to complete the MCRI project in 2019,” said Ye Min Aung, managing director of MAPCO. 

The two companies will also invest in building agri-business service centers (ASCs) across 33 townships in Myanmar. This investment is estimated to be around $400 million. A memorandum of understanding had been signed between the two companies in late 2017, and currently, feasibility studies are being performed on the rice market, agricultural market and its related businesses. 

In implementing the two projects, CITIC Construction and MAPCO are looking into establishing a joint venture, which could lead either company to take a majority stake of 51 percent. 

MAPCO will contribute with its existing assets and CITIC with the working capital form China CITIC Bank, said Aung. “We are targeting to submit a proposal to the Myanmar Investment Commission around the first half of February,” said Aung. 

The two companies are also preparing to establish a service business that will provide engineering and contracting works for the agriculture industry. In providing agribusiness services centers, the joint venture is aiming to offer services relating to mechanization and provision of fertilizer and agro chemicals, targeting any type of agriculture products. 

“We expect to take up to 2020 to implement the agri business service centers across the country,” said Aung. Further, he said they would welcome additional shareholders for the project. 

The targeted main businesses that will be implemented under the ASC project include, contract farming and seed production in partnership with farmers; drying and storage facilities that include building warehouses and grain dryers; sales of fertilizer and agro-chemicals in a most reasonable price and best quality; and offering farm mechanization service. On the other hand, the companies are in talks with a Chinese bank for a possible loan for the ASC project. 

On a broader picture, MAPCO said it welcomes long-term strategic investors interested to join the team with up to 35 per cent stake in the company. Aung said the firm was interested in welcoming investors targeting agriculture commodity trading space. “With the liberalization of the trading of agricultural products, we welcome investors who are interested in dealing across logistics and trading,” he added.

From – Deal Street Asia

Gobi Partners marks Philippine foray with two deals from joint fund

The Gobi Core Philippine Fund, a $10 million joint venture between Gobi Partners and Core Capital, has announced the completion of its first two deals, which sees it investing in startups in the local health and education sector. The undisclosed amount of seed funding for MariaHealth and marks Gobi’s first investments in the Philippine market, the Malaysia-based VC said in an official statement. 

Founded in 2016, MariaHealth claims to be the first online health marketplace in the country. The startup works to enable top health service providers to provide new and different products and services in a country where health insurance has become an expensive critical problem. 

Edukasyon, meanwhile, is an online platform for Gen-Z (ages 13-23) youth in the Philippines. It aims to empower students to make better informed choices for their education, career and life by engaging with them across their three key identities – as students, consumers and future employees – in partnership with the institutions within the ecosystem surrounding the youth – schools, foundations and corporations. 

Core Capital Partner Jason Gaisano says he believes the investments in MariaHealth and will bring outside interest to the Philippine startup ecosystem – in line with GobiCore’s mission to expose Philippine-based startups to more global markets. 
“We will continue to provide exposure and networking for the next wave of companies, and are eager to make the next batch of investments through this Fund.” For Manila-based Core Capital, the GobiCore fund counts as its first fund, which it co-manages with Gobi Partners. 

Launched in October 2018, the fund seeks to support seed-stage and pre-Series A startups in the Philippines with an initial focus on B2B e-commerce, platform-as-a-service (PaaS), health tech and logistic companies. 

Going forward, the fund plans to expand into other sectors including travel, entertainment and retail tech. The launch of the fund will give Philippine-based startups access to the extensive network of Gobi, which is one of the first venture capital firms with a regional presence across China, Hong Kong, and ASEAN with over $1.1 billion in assets under management (AUM). 

For Gobi, the micro-fund marks its entry in the Philippines, a country lagging behind its regional counterparts when it comes to availability of VC funds. “With a population of 120 million, the Philippines is the second largest country in ASEAN, but has been overlooked by venture capitalists. We think that’s about to change, and we’re thrilled that we can get in on the ground floor of the digital transformation that is sweeping across the Philippines.” 

Very similar to its move in the Philippines, Gobi has also launched a $10-million micro-fund for Indonesia called the Gobi-Agung Fund. Both investment vehicles will serve as discovery funds for the firm and will be backed up by Gobi’s Meranti ASEAN Growth Fund, the firm has said.

From – Deal Street Asia
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