The Asia-based investment specialist has successfully closed its first round of fundraising for a Thai direct private equity strategy. The strategy targets small to mid-market companies with exposure to Thailand’s long-term growth, with potential to capitalise on attractive post-Covid valuations, and aims to deliver outsized returns of two times MOIC and 20% IRR over the strategy’s term of seven years.
Singapore, 30 May 2022 – Fullerton Fund Management (“Fullerton”) has raised $100 million for its first Thai Private Equity strategy via KBank Private Banking, demonstrating its ability to capture timely investment opportunities across private and public markets. The strategy is now in the latter stages of its capital-raising phase, with initial deployments already made into underlying companies.
“With correlation between traditional asset classes breaking down, Fullerton has been strengthening its alternatives capabilities to meet rising investor interest and appetite in nontraditional segments. For Thai private equity, we will drive value creation for companies through well-honed strategies to grow their businesses, improve their balance sheets, as well as management quality, for downstream opportunities,” said Mark Yuen, Chief Business Development Officer, at Fullerton Fund Management. “Fullerton has 20 years of experience in managing capital for a wide base of investors. Our private equity team, in particular, has an average of 13 years’ experience and has a deep understanding of markets, coupled with strong risk management to ensure we deliver strong outcomes for our clients.”
Fullerton has partnered with KBank Private Banking, Hatton Equity Partners, and Land and Houses Fund Management to launch the first-ever Thailand focused private equity strategy accessible to Thai investors in the form of mutual fund. The strategy seeks to invest in eight to 12 mid-sized companies in Thailand. The fund manager and team would manage these portfolio companies to reach their target profitability goals and valuations. Eventually, the strategy seeks to secure returns through a sale of the portfolio company or an IPO.
The Fullerton Thai Private Equity strategy is targeting to deliver returns of two times multiple of invested capital (MOIC) and 20% gross internal rate of return (IRR) over the strategy’s life of seven years. The strategy offers investors the opportunity to invest in Thai family-owned businesses in transition, spin offs from conglomerates and corporations, plus Covid-resilient and Covid-recovery businesses. The strategy may target sectors such as consumer retail, food industries, industrial and advanced manufacturing, education, information and tech, healthcare and medical services, financial and business services.
“The Thai investable market is deeply underserved by private equity relative to the economy’ssize. These companies are looking to alternative sources of funding like private equity in place of traditional bank loans as funding sources, especially in the wake of Covid-19,” added Tan Huck Khim, Head of Alternatives, at Fullerton Fund Management. “Thailand is an attractive market for private equity investing, as it is home to many family-run businesses that are experiencing leadership transitions to the next generation. This new generation is increasingly open to external influences that can add value. Thailand’s ageing population will accelerate these successions. These businesses could also potentially see valuation enhancements from operational improvements, professionally-led management, and stronger governance.”
Family-owned businesses in Thailand make up 75% of Thailand’s stock exchange, according to PwC’s 2019 Global Family Business Survey. These family-owned businesses also contribute to 80% of Thailand’s Gross Domestic Product (GDP) and have a combined wealth of THB 30 trillion.
The strategy will leverage KBank Private Banking’s strong proprietary network in capital markets and business owners in Thailand, and tap into Fullerton’s proprietary deal flow and industry network access for investment ideas. Fullerton may also work with Thai partners to comprehensively identify and capture deal opportunities.
“Against the current backdrop of volatile public market, private equity emerges as attractive asset class that can reduce overall portfolio risk and increase potential for long-term gains.KBank Private Banking previously offered two private equity funds investing in international companies. Since inception, the first fund launched in 2019 has generated approximately over 60%, while the second fund launched in 2020 is expected to show stellar performance, as well,” said Dr. Triphon Phumiwasana, Business Head at KBank Private Banking. “KBank Private Banking is committed to providing our customers with innovative products that diversify their investment exposure and contribute to consistent positive returns. Among them are opportunities to invest in alternative assets, such as private equity funds, and having access to complex investment instruments through the form of mutual funds,”
Since 2017, Fullerton’s AUM has grown meaningfully to US$39.5 billion as of end March 2022, with strong growth from its intermediaries and institutional business lines. As of end March 2022, Fullerton had a total of US$2.3 billion AUM in alternatives investment commitment. For one of its primary private assets strategy, as of end March 2022, it has actively deployed US$886 million and since the programme’s inception in 2019, has delivered 27% IRR^ to date.