Issue 40

Malaysia’s Petronas sets up $350m venture capital fund

Malaysia’s state energy firm Petronas said on Friday it had set up a $350 million venture capital arm for industrial and energy investments. 

The newly launched Petronas Corporate Venture Capital will look to invest in startups in advanced materials, specialty chemicals as well as those involved in the future of energy, Petronas said in a statement. 

“The fund will act as a minority stakeholder in early to growth-stage companies,” Petronas said, adding that it will look for investments in North America, Europe and Asia Pacific. As the sole manager of Malaysia’s oil and gas reserves, Petronas is a significant contributor to government revenue and the country’s largest employer. 

It has been looking to diversify amid volatility in oil markets. This year, Petronas acquired a Singapore-based solar energy company as part of a strategy to move into renewable energy and chase high-growth businesses to complement its mainstay operations. 

Last week, Malaysian Prime Minister Mahathir Mohamad said the government was considering listing the exploration and production arm of Petronas as part of efforts to raise money to reduce debt.

From – Deal Street Asia

S Korea’s Shinhan invests in Indonesia’s Bukalapak at $2.5b valuation

Indonesian e-commerce major Bukalapak announced on Friday that South Korean conglomerate Shinhan GIB has joined the firm’s latest Series F funding round, along with a few existing investors. 

Indonesia’s media conglomerate Emtek and another global institutional investor (whose name has not been disclosed) also participated in the round. 

Bukalapak, which became Indonesia’s fourth unicorn last year, did not disclose the deal size or the stake that Shinhan GIB picked up but added that the funding has pegged its valuation at a whopping $2.5 billion. 

Other unicorns in the country are Tokopedia, GOJEK, and Traveloka. Bukalapak plans to use the corpus raised to facilitate its long-term plan and business strategy to expand its operation. However, it did not specify any details. Established in 2010, Bukalapak now has 70 million active users, with over 4 million active sellers, 2 million mom-and-pop kiosks. On the business side, it has a significant number of individual agents across the archipelago’, who are referred to as ‘mitra Bukalapak’. 

Apart from its core online marketplace business, the company offers a slew of products such as streaming video features, offering mutual funds and fintech products. It also allows users to purchase phone credit and pay electricity and insurance bills. Shinhan GIB is the investment banking unit of Shinhan Financial Group or SFG that was set up in 2017 to facilitate the development of startups. SFG has total assets amounting to $143 billion and has $19 billion in market cap. 

In January this year, Bukalapak had raised $50 million in series D round from another South Korean investor, Mirae Asset –Naver Asia Growth Fund, a joint venture fund operated by Mirae Asset and Naver, which operates messaging app Line. Apart from these investors, Bukalapak also counts Singapore’s sovereign fund GIC and Alibaba’s Ant Financial among its backers. Indonesia is an important market in Southeast Asia that is poised to witness significant growth in the years to come. 

According to the latest report jointly launched by Google, Singapore’s state investment firm Temasek, and Bain & Co, the country’s internet economy has recorded a growth rate of over 40 per cent year-on-year, driven by a slew of factors such as growing middle-class coupled with a rising ‘netizen’ population in the backdrop of strong domestic consumption.

From – Deal Street Asia

Thai hotelier Centara, Japan’s Taisei, Kanden to build $300m luxury hotel

Thailand’s Centara Hotels & Resorts and Japanese firms Taisei Corporation and Kanden Realty & Development signed a 9 billion baht ($293.64 million) agreement to build a luxury hotel in Osaka, Centara‘s chief executive said on Wednesday. 

The 34-story Centara Grand Hotel Osaka, slated to open by 2023, will be the company’s first hotel in Japan and is part of its strategy of doubling the number of proprieties under management by 2022, Thirayuth Chirathivat said in a statement. The deal is the latest in Thai hospitality firms investing in hotels abroad. 

In September, Singha Estate Pcl opened a $300 million 11,000 square meter resort and entertainment venue in the Maldives. Last year, Minor International Pcl completed a 2.3 billion euro acquisition of Madrid-listed NH Hotel Group SA. 

Centara, a unit of Central Plaza Hotel Pcl, currently has 76 properties including those in Thailand, the Maldives Indonesia and China.

From – Deal Street Asia

Australian PE firm Crescent Capital eyes sale of water pipe maker

Australian buyout firm Crescent Capital Partners is looking to sell a water pipeline manufacturer it bought in 2015, two sources told Reuters, aiming to tap increased offshore interest in water infrastructure. 

The Sydney-based firm has appointed KPMG Corporate Finance to conduct an initial strategic review of Steel Mains, due to be completed before Christmas, the sources said, asking not to be identified because the information was private. 

The 150-year company, which Crescent bought in 2015, is the largest manufacturer of industrial water pipelines with corrosion protection coatings for water infrastructure projects in Australia, according to its website. The business had annual revenues of about A$100 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of about A$15 million, the sources said, without disclosing the expected price the business could fetch. 

The sellers are likely to target offshore buyers including private equity firms and companies in India, Japan and Germany seeking investments exposed to critical infrastructure projects, the sources said. 

Representatives from Steel Mains did not return requests seeking comment. Crescent is also seeking to sell its housing panels business New Zealand Panels Group for over NZ$100 million ($63 million), according to the Australian Financial Review.

From – Deal Street Asia

WeWork case becomes a lesson for startups in what not to do

The implosion of office space company WeWork this week is being digested as a lesson for Silicon Valley startups – in what not to do. WeWork’s parent The We Company on Monday filed to withdraw its initial public offering, a week after the SoftBank-backed startup ousted founder Adam Neumann as its chief executive officer and as its potential IPO valuation dropped as low as $10 billion, from $47 billion in January. 

The consensus among venture capital investors at the TechCrunch Disrupt conference and elsewhere was that unlimited power and money were not good for building companies. Some of the problems were blamed on Japan’s SoftBank Group Corp, a backer of WeWork that has become one of the most powerful tech investors globally. 

SoftBank declined to comment on the criticism. “If a founder is not being responsible – and you know we are fiduciaries at the end of the day to all common shareholders, including employees – we have to do the right thing,” said Neeraj Agrawal, General Partner of Battery Ventures. He spoke during a TechCrunch session and later told Reuters that founders’ power has grown as money has poured into the tech world. 

While interest rates remain low, don’t expect the flow of money to stop, said David Golden, managing partner at Revolution Ventures. He noted that big checks from investors could inflate values, making it more difficult to raise funds later – another issue highlighted by WeWork’s recent valuation struggles. 

Big SoftBank investments sometimes unnerve investors, Golden said. “We call the other early stage investors and say, ‘Hey, congratulations, you just got a great markup in that deal. You look really smart.’ And to a fault they would say, ‘We’re screwed because no one’s going to buy this company now the price has been set too high.’” Ned Desmond, the Chief Operating Officer of tech media, data, and events company TechCrunch said competition among big name venture capitalists was fiercer than ever to get into some of the early-stage companies at the conference. And at the conference, the general mood among the startups was upbeat. 

Garry Drummond, the CEO of 802 Secure, who was showing off his cyber security hardware on the floor, said he was raising up to $8 million in a series A round and that the WeWork debacle was not having any impact. “Nobody’s saying no to us,” he said. But the wealth of funding has a third problem, also seen in WeWork, of undermining spending discipline. 

“Without that capital you are forced to be a little more disciplined on where you get bang for the buck,” said Sameet Mehta Managing Partner at Granite Hill Capital Partners. We Company, in fact, is slashing spending and divesting secondary businesses as it tries to win back investors’ confidence following its botched attempt to go public. 

“I wish they weren’t writing quite such big checks,” said Megan Quinn General Partner of Spark Capital about SoftBank during a session at TechCrunch. “It does feel like a lot of companies have raised more capital than they really know what to do with responsibly.”

From – Deal Street Asia
 All Rights Reserved 2019.

Vision Ventures Management Berhad, 
22-3a & 22-5, Menara Oval Damansara
+603 7733 4593

[References] [Disclosure]