A Renminbi Revival STIC Investments’ Hans Jung on Chaebol Reform What Does Government Money Mean for Local Currency Fundraising? Page 7 Page 15

Both same font

years

Asia’s Private Equity News Source avcj.com February 07 2017 Volume 30 Number 05

EDITOR’S VIEWPOINT GLP bid reflects growing Asia PE logistics appetite Page 3

NEWS Advantage, ChrysCapital, CIC, EIG, Everbright, Hopu, IDG, IFC, iSigma, Jacob Ballas, Kedaara, PEP, Prometheus, Temasek, Warburg Pincus Page 4

DEAL OF THE WEEK Equis bets on Australia’s solar power advantages Page 12 Grab invests in local solutions for Indonesia Page 12

INDUSTRY Q&A A renminbi revival STIC Investments’ Hans Jung on chaebol reform What does government money mean for local currency fundraising? Page 7 Page 15

FOCUS DEAL OF THE WEEK

Bent but unbroken Getting charged up Flipkart’s markdowns don’t tell full story Page 11 Affinity snaps up Korea credit card stake Page 13 China 2017

6th Annual Private Equity & Venture Forum Indonesia 2017 27 April 2017 • Mandarin Oriental, Jakarta GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY SIGN UP ( until SAVENOW! Early confirmed LP speakers include: 10 February 2017 US$300

Fabien Banaletti Markus Bracht Deputy General Manager & Vice President Head of M&A and Sponsor DEG only Finance Asia ) SUMITOMO MITSUI BANKING CORPORATION

Rebekah Woo, CFA, CAIA Kimihiro Fukuyama Senior Director, Deputy Director General, Growth Markets Asia Growth & Cross Border CDPQ ASIA PACIFIC Investment Department DEVELOPMENT BANK OF JAPAN

For the latest programme and speaker line-up, visit avcjindonesia.com

Forum key statistics

200+ 40+ 35+ 9 5 8 Participants Limited Partners speakers countries premium interactive represented networking sessions opportunities

Registration and sponsorship enquiries: Enquiry Anil Nathani T: +852 2158 9636 E: [email protected]

Co-Sponsors

Join your peers avcjindonesia.com #avcjindonesia China 2017

6th Annual Private Equity & Venture Forum EDITOR’S VIEWPOINT Indonesia 2017 [email protected] 27 April 2017 • Mandarin Oriental, Jakarta GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY Managing Editor SIGN UP Tim Burroughs (852) 2158 9661 ( SAVE until NOW! Associate Editor Time to deliver Winnie Liu (852) 2158 9663 10 February 2017 Early confirmed LP speakers include: Staff Writer US$300 Holden Mann (852) 2158 9646 Justin Niessner (852) 2158 9678 Fabien Banaletti Markus Bracht Design Edith Leung, Mansfield Hor Deputy General Manager & Vice President Rana Tang Head of M&A and Sponsor DEG only Events Finance Asia ) IN 2014, GLOBAL LOGISTIC PROPERTIES including Cainiao Network Technology, SF George Sengulovski, SUMITOMO MITSUI BANKING (GLP) put a number on the potential size of Express, Best Logistics Technologies and ZTO Jessie Chan, Jonathon Cohen, CORPORATION China’s modern logistics market: it would be Express have received backing from private Sarah Doyle, worth $2.5 trillion by 2029 as supply ballooned equity investors, as have warehousing specialists Amelie Poon, Fiona Keung, from 550 million square meters – of which only such as Shanghai Yupei Group and e-Shang Jovial Chung,

20% was classified as modern – to 2.5 billion sqm. Redwood. Marketing Rebekah Woo, CFA, CAIA Kimihiro Fukuyama Even then, logistics space per capital would only However, this does not reflect the full Agrina Sandri, Priscilla Chu, Senior Director, Deputy Director General, be one third that of the US, up from a 2014 level quantum of capital active in the sector. The Yasna Mostofi Growth Markets Asia Growth & Cross Border of one 12th. 2014 figure was so high because GLP sold a At the time, GLP had a $16.9 billion portfolio 1.5% equity stake in itself and an approximately Research CDPQ ASIA PACIFIC Investment Department Amy Wu, Helen Lee, comprising 23.4 million sqm of warehousing, of one third interest in its China subsidiary to DEVELOPMENT BANK OF JAPAN Herbert Yum, which nearly three quarters was based in China. a consortium of Chinese investors – Hopu, Kaho Mak, Tim Wong That portfolio is currently worth $40 billion, Boyu Capital and China Life Insurance, among with China accounting for just over half of the others – for $2.5 billion. But this joint venture Sales 53 million sqm in facilities completed or under approach is complemented by an expansive Anil Nathani, Darryl Mag, Debbie Koo, development. fund management operation that covers real Samuel Lau, For the latest programme and speaker line-up, visit avcjindonesia.com And now private equity has put a number on estate investment trusts, income funds and Gavin Lam, Pauline Chen GLP. Warburg Pincus, The Blackstone Group, and development funds across all of GLP’s markets. a consortium comprising three existing minority The likes of Goodman and Prologis employ Subscriptions Forum key statistics shareholders – Hopu Investment, Hillhouse similar strategies. Jade Chan, Karina Ting Capital and GLP’s CEO – is said to have submitted The company’s equity commitment across all Sally Yip bids for the Singapore-listed company. Interest 12 fund products, which have combined assets Publishing Director 200+ 40+ 35+ 9 5 8 has sent the market capitalization soaring to under management of $39.1 billion, is $17.6 Allen Lee Participants Limited Partners speakers countries premium interactive $9 billion, giving the company an enterprise billion. The rest comes from third parties. When represented networking sessions valuation of around $12 billion. Should a deal go GLP established its second China development opportunities through, it would likely be the largest-ever PE- fund in 2015 with $7 billion in capital, 56% came Hong Kong Headquarter backed privatization in Asia. from the parent with the balance provided by Suite 1602-6 Grand Millennium Plaza While GLP’s interests cover the US, Brazil and seven institutions, including pension funds and 181 Queen’s Road Japan, its China presence is seen as the most sovereign wealth funds from Asia, North America Central Hong Kong significant asset. The company is a clear leader in and the Middle East. Four of them also backed T. (852) 2158 9700 terms of modern logistics capacity, with its 15.8 Fund I, which raised $3 billion in 2013. F. (852) 2158 9701 E. [email protected] million sqm of completed facilities, nearly eight GLP therefore does not represent a traditional URL. avcj.com times that of second-placed Goodman Group. private equity buyout. It is an owner and operator GLP is a proxy for rising domestic consumption, of logistics facilities, but also a financial services Beijing Representative Office No.1-2-(2)-B-A554, 1st Building, and e-commerce specifically, with retailers and provider; its fundraising model is driven by the No.66 Nanshatan, Registration and sponsorship enquiries: express delivery and transportation players ability to deploy capital rapidly and ultimately Chaoyang District, Beijing, Enquiry Anil Nathani T: +852 2158 9636 E: [email protected] accounting for the bulk of leased area. It also generate proceeds through sales. GLP’s pursuit of People’s Republic of China scale is only sustainable as long as these outside T. (86) 10 5869 6203 makes for an instructive case study of the F. (86) 10 5869 6205 different ways in which capital is entering China’s investors believe in the opportunity and that the E. [email protected] logistics space. company’s access and execution ability warrants Co-Sponsors Until three years ago, annual private equity a fee. For now, at least, the macro fundamentals The Publisher reserves all rights herein. investment in trucking and courier services, appear to be on its side. Reproduction in whole or in part is permitted only with the written consent of warehousing, and transportation services had AVCJ Group Limited. ISSN 1817-1648 Copyright © 2017 never topped $2 billion, according to AVCJ Research. In 2014, it reached $3.5 billion across 15 deals – both records – and then came to $2 Tim Burroughs A Mergermarket Group company billion and $2.7 billion over the subsequent two Managing Editor years. Most of the leading logistics providers, Asian Venture Capital Journal Join your peers avcjindonesia.com #avcjindonesia Number 05 | Volume 30 | February 07 2017 | avcj.com 3 NEWS

PEP buys Australia’s Allied Alibaba Group-backed electronics retailer Suning ASIA PACIFIC Holdings, and a consortium comprising Hillhouse Mills Capital and Hopu Investment are said to be Bilden to join Trump Pacific Equity Partners (PEP) has agreed to buy among those lining up bids. administration Australian flour producer Allied Mills in a deal that values the company at A$455 million ($344 CIC, Temasek, Hopu back President Donald Trump has announced that million). The transaction will see PEP take a 100% Philip Bilden, who previously led the Asia stake in Allied Mills from its backers GrainCorp innovation fund operation of HarbourVest Partners, will be his and Cargill Australia, which hold 60% and 40% China Investment Corporation (CIC), Silk Road nominee for US navy secretary. Bilden joined respectively. GrainCorp said the GP will pay Fund, state-owned property developer Shum HarbourVest in Boston in 1991 and relocated to A$190 million for its stake. Yip Group and Singapore’s Temasek Holdings Hong Kong in 1996 to establish the firm’s Asian have launched a technology investment fund in offices. He transitioned to a senior advisor role in partnership with SoftBank-owned ARM Holdings 2012. Bilden served in the Army Reserve for 10 and Hopu Investments. The vehicle, which will years from 1986. be managed by UK-based chipmaker ARM and Hopu, is said to have a target of $800 million. AUSTRALASIA HKMA to boost long-term investments German strategic buys The Hong Kong Monetary Authority plans to control of Cura Group increase investments from the its long-term German healthcare services and equipment growth portfolio – the majority of which is provider Fresenius Medical Care has agreed to deployed in private equity – in response to a take control of Australia’s Cura Group, a hospital PEP plans to integrate Allied Mills with “high complex and unpredictable” global political operator backed by Intermediate Capital Group Pinnacle, the baked goods manufacturer that the and economic environment. The Exchange Fund (ICG). The deal reportedly involves the transfer GP acquired from Irish food giant Kerry Group ended 2016 with HK$3.63 trillion ($468 billion) of a 70% stake and values the company at up to in 2015 for a reported A$250 million. It wants in assets, up from HK$3.42 trillion the previous A$450 million ($345 million.) ICG supported a to create a market leader in the frozen specialty year. This included HK$61 billion in investment management buyout of Cura in 2014. baking, in-store baking and bakery ingredients income. spaces, presenting customers with a one-stop- New Zealand’s Phitek sold shop option. Everbright in second close Cargill and GrainCorp acquired Allied Mills to US tech player from Australian breadmaker Goodman Fielder in on global fund New Zealand-based audio equipment and 2002. In its most recent annual report GrainCorp China Everbright has reached a second close technology developer Phitek Systems has been reported the book value of its interest in the of $294 million on its cross-border investment sold to a US strategic buyer, providing an exit for company as A$178 million, up from A$168 fund, which has a target of $500 million. The GP investors including the government-backed New million the prior year. Over the same period Allied expects to hold a final close on the fund this Zealand Venture Investment Fund (NZVIF), TMT Mills’ revenue rose from A$498 million to A$506 year. It will invest in equities and equity-linked Ventures and angel fund K1W1. New York-listed million, while profit dropped from A$32 million to securities of companies based in Europe and electronics group Amphenol acquired all the A$31 million. North America, primarily through M&A. shares in Phitek for NZ$60 million ($43.5 million). Delivery start-up gets $50m EIG supports Australia’s manufacturer of household lifestyle products. Coast2Coast invested via its consumer arm Series C Senex Marlin Home, which acquired another Australian Shansong, a Chinese start-up that provides EIG Global Energy Partners has invested in Senex homewares company, Albi, last year for at least intercity courier services, has raised a $50 Energy and will partner with the Australian oil A$50 million ($38.3 million). million Series C round of funding led by SIG Asia and gas producer on several of its projects. Senex Investment and Yi Capital. Prometheus Capital, a will issue about 173 million new shares to EIG PE fund set up by Wang Sicong, the son of Wanda and other unnamed institutional investors for GREATER CHINA Group chairman Wang Jianlin, also participated. A$0.315 each, raising A$55 million ($42 million) in all. The new shares represent a 15% stake in the Global Logistic Properties NORTH ASIA company, with EIG taking a 12.6% stake. confirms buyout bids South African GP acquires Global Logistic Properties (GLP), a Singapore- Advantage agrees exit from listed warehouse operator with a $40 billion Decor portfolio – over half of which is based in China GTA TeleGuam South African private equity investor Coast2Coast – has confirmed the receipt of multiple buyout Japan-based Advantage Partners has agreed Capital has acquired Australia’s Decor, a offers. Warburg Pincus, The Blackstone Group, to sell its controlling stake in GTA TeleGuam

4 avcj.com | February 07 2017 | Volume 30 | Number 05 NEWS

to US-based family office Huntsman Family Ant Financial to acquire Jacob Ballas, NYLIM back Investments. A previous attempt to exit the company to Telekom Indonesia – for a reported MoneyGram Centrum Capital valuation of $300 million – was aborted last year, Thomas H. Lee Partners (THL) will exit US-listed Jacob Ballas and New York Life Investment supposedly for regulatory reasons. MoneyGram following an agreement to merge Management (NYLIM) will take a minority stake in the money-transfer services provider with Ant CentrumDirect, the foreign exchange business of iSigma exits Japan’s Sweet Financial, a PE-backed online financial services India-listed financial services company Centrum affiliate of Alibaba Group, in a deal that values the Capital. The two firms will invest through Jacob Style business at $880 million. Ballas Capital India Private and their joint vehicle ISigma, a mid-size buyout firm controlled by Ant Financial has offered to buy all common NYLIM Jacob Ballas India Holdings IV. The trading and investment conglomerate Marubeni, and preferred shares for $13.5 apiece in cash and commitment is reportedly worth $50 million. has exited its 100% stake in Japanese food and assume or refinance MoneyGram’s outstanding beverage company Sweet Style to Mitsuuroko debt. The price represents an 11.5% premium to Vanguard marks down Group. Financial details were not disclosed. Sweet the January 25 closing price. Style’s core brands are Motomachi Coffee and the India’s Ola bakery chain Azabujuban Mont-Thabor. Vanguard Group has cut the value of its shares in Indian ride-hailing app Ola by 41%, joining several other US mutual funds in marking down SOUTH ASIA Indian tech unicorns. In its quarterly filing, Vanguard World Fund indicated that its 166,000 India budget clarifies PE shares of Ola’s parent Ani Technologies were worth $182.74 each in November, down from tax $311.27 per share reported by Vanguard Variable India’s 2017 Union Budget included measures Insurance Funds in September. to provide clarity on tax burdens for foreign investors. Many GPs were concerned that a 2012 IFC to invest $55m in indirect transfer provision would result in tax being levied on exits from Indian companies. The The deal promises to expand Ant Financial’s Bangladeshi bank government said it would exempt investors from global network, which already includes The International Finance Corporation (IFC) is taxation on selling shares that have already been partnerships with Paytm in India and Ascend considering a commitment of $55 million in taxed, and also exempt Category I and II FPIs – Money in Thailand. MoneyGram’s North America- Bangladesh’s Dhaka Bank. The investment would which includes most PE and VC funds – from the centric network of 2.4 billion bank and mobile include a loan for up to $20 million from the IFC’s indirect transfer provision entirely. accounts and 350,000 physical locations will be account and a $35 million guarantee from the connected with the 450 million Alipay users and Global Trade Finance Program, an initiative by the PE-backed Au Financiers 180 million Patym users. Together they will serve IFC to mitigate risks for banks seeking to finance more than 200 countries. trade in emerging markets. files for IPO MoneyGram spun out from its parent Indian non-banking financial company Au company Viad Corporation in 2004, one year Financiers has filed for an IPO, providing after incorporation, and subsequently went SOUTHEAST ASIA partial exits for PE backers including Warburg public in the US. It ran into financial difficulty Pincus, ChrysCapital, Kedaara Capital and the in 2008 and was rescued through a $1.5 billion BCA launches fintech International Finance Corporation. It will see Au recapitalization led by THL and Goldman Sachs. sell a 19% stake in the company. THL is currently the largest shareholder in investment unit MoneyGram with a 44.5% stake. Indonesia’s Bank Central Asia (BCA) has launched IFC considers commitment a VC arm. Central Capital Ventura has received paid-up capital of IDR200 billion ($15 million). It to IDG India fund billion ($89 million). TechProcess was incubated will invest and collaborate with fintech start-ups The International Finance Corporation (IFC), the by ICICI Venture and has also received capital that will enhance the overall financial service investment arm of the World Bank, has proposed from Battery Ventures, Nokia Growth Partners and ecosystem of BCA. a commitment of up to $20 million in IDG Greylock Partners. Ventures’ third India-focused fund. The vehicle IFC proposes $150m launched last year with a target of $200 million. Endiya closes debut fund at investment in Thai bank $26m France’s Ingenico buys The International Finance Corporation plans Indian early-stage VC firm Endiya has reached a to invest up to $150 million in Thai lender TMB TechProcess final close of INR1.75 billion ($25.7 million) on its Bank. The development finance institution French electronic payment service provider debut fund. The vehicle, Endiya Partners Fund said in a proposal that the investment would Ingenico has agreed to buy TechProcess, an I, will support companies in the technology, help increase access to financial services for Indian developer of online and mobile payment healthcare and consumer services sectors at the Thailand’s underserved small and medium-sized services. The deal is reportedly worth about INR6 seed and pre-Series A stage. enterprises.

Number 05 | Volume 30 | February 07 2017 | avcj.com 5 14th Annual Private Equity & Venture Forum Australia & New Zealand 2017 1-3 March 2017 • The Westin Sydney GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY Announcing the line-up of REGISTER speakers confirmed: NOW!

Steve Byrom Michael Weaver Adrian Kerley Head of Private Equity Manager, Investment Manager – FUTURE FUND Private Markets Private Capital SUNSUPER COMMONWEALTH SUPERANNUATION CORPORATION Will MacAulay Alicia Gregory Jenny Newmarch Investment Manager – Head of Private Equity Portfolio Manager - Unlisted Assets MLC Growth Assets HESTA FIRST STATE SUPER

Cameron Blanks Bill Ferris AC Ben Frewin Managing Director Executive Chairman Managing Director PACIFIC EQUITY CHAMP PRIVATE ARCHER CAPITAL PARTNERS EQUITY

For the latest programme and speaker line-up, visit avcjausnz.com

2016 Forum key statistics

250+ 100+ 60+ 17 6 participants Limited Partners speakers countries premium networking represented opportunities Registration enquiries: Sponsorship enquiries: Anil Nathani T: +852 2158 9636 Darryl Mag T: +852 2158 9639 Enquiry E: [email protected] E: [email protected]

Co-Sponsors

Gala Cocktail Reception Host

Join your peers avcjausnz.com #avcjausnz 14th Annual Private Equity & Venture Forum Australia & COVER STORY New Zealand 2017 [email protected] 1-3 March 2017 • The Westin Sydney GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY Announcing the line-up of REGISTER Policy power NOW! The launch of several huge government-backed funds has skewed renminbi-denominated fundraising in speakers confirmed: China. What does their arrival mean for valuations and for the nascent independent LP community?

Steve Byrom Michael Weaver Adrian Kerley QIMING VENTURE PARTNERS IS ONE OF A channels. Is Beijing laying the ground for a more local currency total is just $25.6 billion, below the Head of Private Equity Manager, Investment Manager – Private Capital select group of Chinese VC investors that have balanced system or simply throwing capital at $33.8 billion raised in 2015. The number of funds FUTURE FUND Private Markets both a decade-long track record and a strong its problems, sparing little thought for long-term achieving a partial or final close last year was 72, COMMONWEALTH SUNSUPER institutional investor following. The firm has $2.7 sustainability? down from 150 in 2015; in 2011 it was 267. Even SUPERANNUATION billion in assets under management, but even if the LP landscape is becoming more diversified, CORPORATION seven years ago, with only two US funds and Twin peaks those investors are clearly picky – but the reality about $500 million at its disposal, Qiming could China PE fundraising has seen two peaks. One is that the government is skewing the overall Will MacAulay Alicia Gregory Jenny Newmarch count the Princeton University endowment and was reached in 2011, when $52.8 billion poured picture. Investment Manager – Head of Private Equity Portfolio Manager - the Robert Wood Johnson Foundation among into the asset class, 70% of it entering renminbi “A huge amount of fiscal money flowed into Unlisted Assets MLC Growth Assets its LPs. funds as HNWIs pursued multiples arbitrage the PE system last year through government- HESTA FIRST STATE SUPER That was when the GP decided to raise a opportunities on ChiNext. For many it proved a backed guidance funds or fund-of-funds,” renminbi-denominated fund. China had taken fruitless endeavor and they abandoned private says Huaijie Li, partner at Oriza Holdings, a various steps to create a domestic private equity equity. The second came last year, with $79.7 government-backed fund-of-funds that has been industry, notably launching ChiNext, a NASDAQ- billion raised, and an extraordinary 80% of around long enough to have invested in Qiming’s Cameron Blanks Bill Ferris AC Ben Frewin style board in Shenzhen that allowed fast- commitments going to renminbi funds. In the second renminbi fund. “That relates to a shift Managing Director Executive Chairman Managing Director growing private companies to go public under absence of a meaningful number of HNWIs, the in how the government wants to support the flexible listing standards. Qiming wanted a piece government role has been magnified. economy. In the past, it poured capital directly PACIFIC EQUITY CHAMP PRIVATE ARCHER CAPITAL of the action and duly set out to raise RMB250 The largest renminbi fund raised between into emerging industries but didn’t end up PARTNERS EQUITY million (then $36.6 million). However, finding 2006 and 2011 was the Innovation Industrial with good results. Now, it wants to support the qualified renminbi LPs proved difficult. Investment Fund, which closed at $4.18 billion economy with the help of PE managers. That’s “Most Chinese LPs were high net worth in 2011. It was launched by Shanghai Creative why mega fund-of-funds are being set up: to For the latest programme and speaker line-up, visit avcjausnz.com individuals (HNWIs), in addition to a few local government guidance funds with specific China PE fundraising: US dollar vs renminbi investment terms and conditions,” says Janet 2016 Forum key statistics Yu, a partner at Qiming. “Fortunately, the NDRC 80,000 300 [National Development Reform Commission] launched a scheme to support independent 60,000 250+ 100+ 60+ 17 6 VCs. We were in the first batch of GPs to receive 200 participants Limited Partners speakers countries premium networking its backing and successfully closed our fund. represented opportunities 40,000 Without the government as an anchor LP, we Funds

might have had to find more HNWIs.” US$ million 100 Registration enquiries: Sponsorship enquiries: The NDRC and the Beijing government 20,000 Anil Nathani T: +852 2158 9636 Darryl Mag T: +852 2158 9639 contributed 40% of Qiming’s first renminbi fund, Enquiry E: [email protected] E: [email protected] most of which went into biomedical investments. 0 0 Six years on, the VC firm closed its fourth local 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 currency vehicle at RMB1.5 billion, continuing a Co-Sponsors Capital raised - US dollar (US$m) Capital raised - Renminbi (US$m) steady increase from RMB605 million for Fund No. of funds - US dollar No. of funds - Renminbi II and RMB1 billion for Fund III. The LP base is Source: AVCJ Research broader and more sophisticated, including fund-of-funds launched by Noah Holdings and CreditEase, Tsinghua University, the Chinese Industries Demonstration & Service Platform, channel public money into the economy at a Academy of Sciences, and several insurers. a local government-connected entity, and larger scale, and in a more concentrated way.” The Qiming transition offers a snapshot tranches of capital were allocated to a variety of The government-backed guidance funds of a Chinese LP landscape that is increasingly GPs, including Sequoia Capital. A cluster of other of a decade ago were established in particular diversified and less government-driven. But this local government-backed funds also achieved locations such as Beijing’s Zhongguancun district, is not borne out by the headline numbers. In final closes, but none reached $1.5 billion. which was earmarked as a technology hotbed Gala Cocktail Reception Host 2016, the government again took center stage, In contrast, between July and September and so the local authorities wanted to encourage announcing several mega funds, albeit with a of 2016, three state-sponsored renminbi funds inbound investment. A similar principle is now view to channeling money into the industry together received around $39 billion. Exclude apparently being applied on a national scale. through more organized and professional this trio of vehicles from consideration and the Premier Li Keqiang last year announced a

Join your peers 7 avcjausnz.com #avcjausnz Number 05 | Volume 30 | February 07 2017 | avcj.com COVER STORY [email protected]

slew of policies to encourage entrepreneurship, vehicle after signing up the NDRC and some Chengtong, itself an SOE, has hired including a RMB40 billion ($6.5 billion) private investors. Industry participants expect Xiangming Fang, who previously made government-guided VC fund for start-ups in the fund-of-funds GPs will earmark some private equity investments for China Re Asset emerging industries. It is one component of capital for direct PE investments and buyouts, in Management, to manage the China Structural an effort to achieve multiple goals: bolster a addition to fund investments. Reform Fund. This movement towards slowing economy; accelerate the transition “The anchor LPs in these government-backed professional management arguably began from investment and export-driven growth to funds and the managers receiving capital are with Oriza around 2014. It began life as Suzhou a consumption and services-led model; reduce quite consistent with six years ago,” says one GP. Venture Group, a government-owned GP, but was then reconfigured as a market-driven fund- Largest renminbi funds, 2011-2016 of-funds, receiving LP commitments from large SOEs and China Development Bank. Appointing Date Amount experienced executives was a logical next step. Fund name Manager closed (US$m) In this way, the line between government China State-owned Enterprises Restructuring Fund* China Chengtong Holdings Sep-16 19,051 and non-government is becoming blurred in China State-owned Venture Capital Fund* China Reform Holdings Aug-16 14,543 some corners – indeed, professionalization is China Minsheng Investment Fund China Minsheng Investment Aug-14 7,272 a prevalent theme everywhere. Institutional National Venture Investment Guiding Fund for Emerging TBC Aug-16 5,817 participation in private equity has grown on the Industries back of deregulation, with insurance companies, Green Silk Road Fund Green Silk Road Fund Mar-15 4,363 corporations and even endowments putting Innovation Industrial Investment Fund Various Aug-11 3,912 more capital to work in the asset class. On the Qianhai Fund of Funds CMB International Capital Jan-16 3,127 retail side, the government clamped down on Beijing CCCC Jianxin Investment Fund CCCC Fund Management Dec-14 2,909 illegal fundraising and unqualified individual Baidu Capital Fund I Baidu Capital Oct-16 2,909 investors. HNWIs increasingly access PE through Xianjin Manufacturing Industry Investment Fund SDIC Innovation Investment Jun-16 2,909 fund-of-funds managed by the likes of Gopher Source: AVCJ Research * First close Asset Management, an investment arm of Noah, and CreditEase. dependency on heavy industry; and achieve “What has changed is how they work together. In The net impact is that more capital is available efficiency through innovation in emerging the past, the MoF was the sole LP in partnerships from an increasingly sophisticated set of LPs. industries and restructuring of traditional ones. with GPs – and the government only paid Foreign private equity firms best known for “The government faces a lot of challenges management fees, not carried interest, because managing US dollar funds have taken notice. A from traditional industries and it also wants to some investments were policy-driven rather than number of GPs – particularly from the VC space, develop a new economy,” says a senior executive market-oriented, resulting in poor results. Now, with GGV Capital the most recent high-profile at Qianhai FoF, a renminbi fund-of-funds set up with the participation of independent LPs, GPs example – are looking to raise renminbi vehicles by the founder of Shenzhen Capital Group. “It are incentivized to invest more commercially. The or enlarge existing pools of local currency capital. is difficult to stimulate one or two sectors, and returns will be split between the GPs and LPs, There is an investment rationale as well. the government can’t rely on Alibaba Group or including the government.” Plenty of private equity firms raised US dollar and Tencent Holdings to create this new economy. renminbi vehicles in the previous boom period, Many sectors such as tourism, entertainment and The professionals driven not only by the availability of capital, but media must be addressed, so the government is It is estimated that there are now around 1,000 also by the restrictions China places on foreign adopting a top-down approach driven by fund renminbi fund-of-funds in China and 60% of investors. Not all industries are open to offshore managers.” them have state support, with total assets of funds, and investments made in those that are At the same time, the National Venture RMB1.5 trillion. Whether initiated by the central subject to additional, time-consuming approvals Investment Guiding Fund for Emerging Industries government or local authorities, a common processes. GPs can expect to receive particular is not actually a single fund. The RMB40 billion theme is leveraging social capital for investment scrutiny when targeting areas such as media and represents the central government’s budget in various sectors. The remaining two of the big content production and online financial services. for the venture capital industry. The Ministry three from 2016 are both intended to address Moreover, if it is thought that a portfolio of Finance (MoF) is responsible for the asset state-owned enterprise (SOE) restructuring. company can achieve a higher valuation by allocation and it will team up with independent The first is a RMB200 billion VC fund launched listing on one of the Chinese bourses rather fund managers to launch fund-of-funds. These by government-owned state asset manager than overseas, renminbi capital may make more managers are selected through a bidding Chinese Reform Holdings, which reached a sense for regulatory and practical reasons. The process, although there is a preference for groups first close of RMB100 billion last August. The government has sought to improve the quality that have government ties. following month, the State-owned Enterprises of the capital markets in recent years, including The MoF has so far made commitments to Restructuring Fund (also known as China the introduction of the New Third Board, which three fund-of-funds, pledging RMB10 billion to Structural Reform Fund) raised RMB131 billion means GPs can achieve liquidity events but with each one as an anchor LP. They are managed towards a target of RMB350 billion. Established looser compliance requirements. China International Capital Corporation (CICC), by Chengtong Holdings, it focuses on cross- “It’s not difficult for established US dollar Infotech Ventures, and State Development & border investment aimed at boosting SOE fund GPs to raise renminbi funds,” says Dayi Sun, Investment Corporation (SDIC). The GPs then competitiveness. LPs range from banks such managing director at US dollar fund-of-funds raised capital from other LPs. CICC, for example, as China Postal Savings Bank to corporates like Jade Invest. “The entry barrier for GPs raising first- reached a final close of RMB40 billion on its China Petroleum & Chemical Corp. time renminbi funds from institutional investors

8 avcj.com | February 07 2017 | Volume 30 | Number 05 COVER STORY [email protected]

will become higher as more teams spin out from around government policy. The capital could dry internet companies and from established PE “New GPs or purely up due to poor performance, loss of interest or and VC firms. But it also becoming more difficult change of personnel, or simply a shift to other for government-backed fund-of-funds to pick government-backed forms of support – and perhaps several years the right fund managers as they’re not as well- funds can’t compete later it comes back again. The concern is not only trained as foreign institutional LPs.” that government-backed funds artificially extend effectively against an existing period of inflated valuations, but also Costly competition that the lessons are not learned and a policy- A natural consequence of these favorable longstanding driven boom-and-bust cycle is repeated. policies in China is increased competition for What remains to be seen is whether the commercial GPs” – Ken Xu deals. “Is there too much renminbi capital chasing government funds can contribute to the a limited number of deals?” the Qianhai FoF maturation taking place in the wider LP executive asks. “I think that issue is always there.” high quality Chinese start-ups is not growing at landscape. If, for example, CICC receives seed Competition has certainly intensified in the the same pace as the pool of capital seeking to funding for a fund-of-funds from the MoF and renminbi space, with more angel investors and back them. As a result, inexperienced GPs back then raises more from independent sources, institutional LPs pumping capital into the system companies that are unviable, resulting in huge is an ecosystem being created that otherwise from early-stage to late-stage deals. Banyan losses for the government. would not be there? And, by extension, can Capital, a younger generationW Chinese VC “The government will seed many new the emergence of independent domestic LPs firm that spun out from IDG Capital, closed two GPs in the renminbi space. It will create more minimize the volatility created by government renminbi funds shortly after its US dollar vehicles. competition, but I think the impact will still be policy, in the medium if not the short term? It operates under a two-pronged strategy limited. Over one or two cycles, many of these “We are looking at other institutional LPs, intended to offer access to the best deals. GPs will suffer losses and then disappear because including pension funds, insurance companies, The question posed by the influx of high quality companies only want to work with and other market-driven fund-of-funds. Another government capital entering the industry is the most reputable GPs,” he says. “From that group of emerging LPs is the banks,” says Yu. whether it will exacerbate this phenomenon: perspective, new GPs or purely government- “Government-backed funds can attract more more GPs are able to raise funds and the dry backed funds can’t compete effectively against capital from different sources into private equity. powder agitating to be put to work drives up longstanding commercial GPs with strong track But they are only part of the wider LP community valuations. Ken Xu, partner at early-stage investor records on the US dollar and renminbi sides.” – their in-and-out approach will not impact the Gobi Partners, observes that the number of There is also an innate lack of predictability growing prospects of renminbi funds.”

Need reliable intelligence on Asian private equity? AVCJ is your solution

The AVCJ Private Equity & Venture Capital Reports provide key information about the fast changing Asian private equity and venture capital industry. Researched and compiled by AVCJ’s industry leading research team, the reports offer an in-depth view of private equity and venture capital activity in major Asian countries and regions including Australasia, China, Australasia India, North Asia and Southeast Asia. These reports are used by the many upper quartile private 2016 AVCJ private equity and venture capital report

12th annual edition equity firms in Asia and across the globe. sponsored by

Each AVCJ Report includes the latest statistics and analysis, delivering insights on investments, capital raising, sector-specific activity. The reports also feature information on relevant leading companies and business transactions. Learn more at asianfn.com/journal_regionalreports.aspx.

China 2016 For more information, please contact Sally Yip at +(852) 2158 9658 or email [email protected]. AVCJ private equity and venture capital report 12th annual edition

sponsored by AVCJ Group Ltd. Suite 1602-6, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong Tel: (852) 2158 9700 Fax: (852) 2158 9701 Email: [email protected] Website: avcj.com AVCJ - your Asian private equity information source.

Southeast North Asia Asian Private Equity and Asia 2016 2016 India 2016 Venture Capital Review AVCJ private equity and venture capital report AVCJ private equity and venture capital report AVCJ private equity and venture capital report 2016

th 12th annual edition 12th annual edition 12 annual edition 12th annual edition

sponsored by sponsored by sponsored by sponsored by avcj.com asianfn.com/Research_Database.aspx Your ultimate link to the Asian private equity, venture capital and M&A markets

AVCJ database is the ultimate link between Asian dealmakers and those who provide advisory, financial, legal and technological services to the private equity, venture capital and M&A industries. The AVCJ Database gives subscribers access to more than 150,000 companies and facts and statistics on over 114,800 transactions.

Deal Report

NASDAQ listed Focus Media has received a non-binding tender offer of $5.4 per share, or $27 per ADS, of its entire outstanding common shares from a consortium of investors, including company chairman Nan-chun Jiang, CDH Investments, China Everbright Limited, CITIC Capital Partners, FountainVest Partners and The Carlyle Group. The consideration would be approximately $2.88 Features billion based on the 532.95 million common shares outstanding and not held by the chairman.

Announced (US$mln): $2,877.9400 Previous Stake: 17.56% Stage: Buy-outs (MBO/MBI/LBO)

Announced Date: Aug 12, 2012 Deal Stake: 82.44% Closed (US$mln): n/d ■ Final Stake: 100.00% A large profile pool with around 9,100 Closed Date: n/d

Deal Type: Private Equity Buyout funds, 4,300 GPs and 3,500 LPs Deal Status: Agreement in Principle Acquisition Technique: Leveraged Buyout

Acquisition Attitude: Neutral ■ Comprehensive records, including Involved Companies Company Name Deal Role Amount(US$mln) Deal Stake Industry Nationality

Carlyle Asia - China Investor n/d n/d Private Equity United States more than 105,700 M&A transactions; CDH China Management Co., Investor n/d n/d Private Equity Hong Kong Ltd. China Everbright Ltd. Investor n/d n/d Finance Hong Kong CITIC Capital Partners Ltd. Investor n/d n/d Private Equity Hong Kong 30,000+ PE/VC investments; over FountainVest Advisors Ltd. Investor n/d n/d Private Equity China (PRC) Nan-chun Jiang Investor n/d n/d Unclassified China (PRC) Focus Media (China) Holding Investee n/d n/d Advertising China (PRC) 3,000 PE/venture-backed IPOs; and in Co., Ltd. (FocusMedia) Fosun International Ltd. Seller n/d -17.20% Steel China (PRC) Undisclosed Shareholder(s) Seller n/d -65.24% Unclassified United States Citigroup Global Markets Asia Financial Adviser, n/d n/d Securities/Investment United States excess of 6,100 exits Ltd. Investor (Carlyle Asia Banking - China) Citigroup Global Markets Asia Financial Adviser, n/d n/d Securities/Investment United States Ltd. Investor (CDH China Banking Management Co., Ltd.) ■ Pan-Asian coverage, including Citigroup Global Markets Asia Financial Adviser, n/d n/d Securities/Investment United States Ltd. Investor (China Banking Everbright Ltd.) Citigroup Global Markets Asia Financial Adviser, n/d n/d Securities/Investment United States Australasia and Japan Ltd. Investor (CITIC Banking Capital Partners Ltd.) Citigroup Global Markets Asia Financial Adviser, n/d n/d Securities/Investment United States Ltd. Investor Banking (FountainVest Advisors Ltd.) ■ Citigroup Global Markets Asia Financial Adviser, n/d n/d Securities/Investment United States Data that is updated daily and tracked Ltd. Investor (Nan-chun Banking Jiang) JP Morgan & Co Inc. Financial Adviser, n/d n/d Securities/Investment United States Investee (Focus Media Banking as far back as 1990 - the longest and (China) Holding Co., Ltd. (FocusMedia)) Morgan Stanley - Beijing Financial Adviser, n/d n/d Securities/Investment United States Representative Office Investor (CITIC Banking deepest track record in Asia. Capital Partners Ltd.) Conyers Dill & Pearman Legal Adviser, n/d n/d Legal Services United Kingdom Investor (Nan-chun Jiang) ■ Data downloads in MS Excel and PDF Copyright 2012 AVCJ Group Ltd. All rights reserved. formats Plus 1

■ Powerful search functions and accurate ✔ New features on selection statistics for the analysis ✔ Performance data on exits ■ Customer service via telephone and ✔ Portfolio holding period email

For a live demonstration or to subscribe, please call Helen Lee at +(852) 2158 9644 or email [email protected] avcj.com FOCUS [email protected] A unicorn unbowed Despite a series of markdowns over the last 12 months and increased competitive pressure, Indian investors say e-commerce giant Flipkart is still a force to be reckoned with

THE PAST 12 MONTHS HAVE BEEN TOUGH “It’s not apples to oranges, because for Jabong last year. The division reportedly has an for Flipkart, with the Indian e-commerce giant Flipkart to survive and be profitable, they have to almost 70% share of India’s fashion e-commerce weathering a series of markdowns from US- compete with the likes of Amazon,” says a partner market. Ventures like Myntra and logistics arm based mutual funds. Fidelity and Morgan Stanley at an Indian law firm that has both Flipkart and Ekart, originally created to handle the parent stood out by cutting their valuations across four Amazon as clients. “Even before the Fidelity company’s deliveries and soon to be open to all consecutive quarters, but they were not alone in report, people had been questioning Flipkart’s e-commerce players in India, are seen as valuable embracing a new reality. model, and Flipkart itself made a strong push to extensions to Flipkart’s brand. It was inevitable that the cuts, which took the government for a protectionist environment.” Investors also point to the Flipkart co-founder the company’s valuation from $15 billion as of its The markdowns also came during a year that Binny Bansal stepping down as CEO in favor last funding round to around $5.5 billion, would saw Amazon gain steam in India. In June it took of Kalyan Krishnamurthy, a former managing attract negative headlines. But many members the lead over Flipkart and Snapdeal in web traffic, director at the company’s largest backer of India’s VC community say relying on the while in July it beat them in gross merchandise Tiger Global Management, as a positive sign. judgment of other investors, particularly hedge volume (GMV) for the first time. The prospect of Krishnamurthy is well-regarded at Flipkart, having funds whose expectations and assessment formerly worked at the company during its methods are unclear, is a mistake. heyday in 2014 as head of sales and returned to “Some of these guys are so removed from “You’ve got to ask that position last year. what is happening at Flipkart that I sometimes wonder how they can even value it,” says Anand whether the people Back to reality Prasanna, formerly of Sequoia Capital India and who valued these Despite these signs of strength, investors Morgan Creek, and now co-founder of mid-stage acknowledge Flipkart faces a serious challenge tech-focused Indian VC firm Iron Pillar. companies pretty high from Amazon and in stabilizing its core business. While industry players acknowledge Flipkart’s Iron Pillar’s Prasanna believes that the market’s struggles in recent years, they stress that earlier just gave a earlier enthusiasm for unicorns may have been investors must consider many factors beyond wrong valuation, and overblown, and developments like the mutual a simple dollar appraisal to judge a company’s funds’ markdowns indicate the return of more worth. This applies to several Indian tech now it’s reverting back realistic assessments. unicorns, with online marketplace Snapdeal and “You’ve got to ask whether the people who – Anand Prasanna ride-hailing app operator Ola also experiencing to normal” valued these companies pretty high earlier just markdowns in recent months. gave a wrong valuation, and now it’s reverting having to compete directly with a cash-flush US back to normal,” he explains. “When we look at a Madness in method? competitor has led some investors to question lot of consumer tech companies, we have to tell Flipkart has dismissed the idea that the cuts the Indian e-commerce players’ strategies. entrepreneurs the hard fact that their last round represents a warning sign for investors, calling “You’re seeing fewer questions on the Paytm was overvalued and we’re actually going to value the filings “theoretical exercises” that do not take model because it’s cash generative, whereas them below that.” into account its internal operations and planning. Flipkart, Snapdeal, and Amazon are burning cash,” While the markdown announcements may Indeed, the methods by which mutual funds says the lawyer. “So their survival is dependent have raised fears of a down round for Flipkart and value their portfolio companies are not known. on deep pockets, and if the investors don’t put in its peers, investors feel the industry may benefit It is believed that they rely on a mix of the that money, then what is the survival model?” from the reality check that such a move would companies’ financial information, the previous Directly comparing sales figures may be provide. Cutting off the cash spigot, or at least share price, and market values of listed firms in misleading, however. CreedCap’s Pereira notes limiting the inflow, could push the company’s the same industry. that while Amazon’s GMV is roughly equal to leadership to be more creative and focus on Some investors point to this last factor as Flipkart’s, it achieved this with almost double the setting itself apart from competitors rather than a potential problem with the mutual funds’ cash burn. Flipkart’s success in achieving a more drowning them in capital. assessments. Vishal Pereira, managing director disciplined performance record may reassure “If you’re burning capital because you want to with CreedCap Asia Advisors, says comparing investors that it can mount a sustained challenge stay relevant in that particular league and beat India’s e-commerce companies with their to Amazon given the needed financial support. out competition, then there is no end to it,” says listed counterparts creates unfair expectations Along with the cash burn factor, market Vinayak Burman, founding partner at Vertices for start-ups that are still at an earlier stage watchers note that Flipkart’s sales figures do Partners. “If tomorrow you’re competing with of development and targeting a completely not include those of fashion-focused online someone who has three times deeper pockets, different market. Others, however, point out that retailer Myntra, which Flipkart acquired in 2014 you’re bound to get burned out. The focus needs the market will inevitably make the comparison. and in turn bought Rocket Internet-backed to be on what is my differentiator.”

Number 05 | Volume 30 | February 07 2017 | avcj.com 11 DEAL OF THE WEEK [email protected] / [email protected] Equis cracks Australian solar market

DESPITE CLEAR ADVANTAGES IN The Singapore-based GP is making its first facility development at the site. governmental stability, natural conditions and a foray into the country with a A$400 million In more tangible terms, the two projects will reliable judiciary system, Australia has remained ($302 million) commitment to develop two supply enough power for about 63,200 homes conspicuously absent from the portfolio of 100-megawatt solar projects, each slated to and conserve 407 million liters of water per year one of Asia Pacific’s leading renewable energy begin construction this year. The Collinsville that would otherwise be used at coal-fired plants. investors. Equis Funds Group has established project in Queensland and the Tailem Bend The offsetting of greenhouse gas emissions will 47 projects across the broader region since project in South Australia could add a further equate to removing 83,900 passenger vehicles 2010, but has delayed setting up shop down 1,000 MW of capacity in the from the road. under citing a relatively difficult environment for near term across a related The investment caps a securing power sale agreements. 2,000-hectare holding. development hot streak for Equis, “Australia benefits from a transparent land The key to this entry was a with 33 utility-scale renewables title system and an ability to secure land with power purchase agreement with projects completed during the few title holders. Elsewhere in Asia, a single local electricity retailer Snowy past three years – a growth project may involve hundreds of individual land Hydro, which currently owns and rate that equates to one new holders claiming rights under vague ownership operates 5,500 MW of generation installation every five weeks. regimes involving a system of inheritance, capacity. The utility has agreed Solar power: Green light “As Asia’s largest renewable thereby increasing the likelihood of disputes to purchase 100% of the power energy independent power which delay projects or create uncertainty produced from the Tailem Bend for at least 22 producer, there is material value-add in our once construction has commenced,” says years. Tailem Bend will be constructed alongside economies of scale and purchasing power, David Russel, Equis’ CEO. “While Australia has a Snowy Hydro-owned 29 MW diesel-fired power experience, track record of successfully lacked the mature concession and off-take station, and the combined system is expected to completing large renewable energy projects regimes of other countries, this can be resolved be able to provide stable power any time of the and depth of our management team,” Russel through identifying reliable bilateral contract day, year-round. Base load capacity is set to be adds. “How this is applied for the benefit of our counterparties.” further enhanced by a large-scale energy storage Australian projects is the ‘secret sauce.’” Grab thinks local in Indonesia

FOR SOUTHEAST ASIAN RIDE-HAILING food takeout delivery. Having introduced credit likes of Go-Jek and Uber, Maa says the company’s app operator Grab, coming up with effective programs that enable drivers to buy their own balance sheet is healthy – it has raised more than payments solutions is about catering to the cars, the next step is consumer credit products $1 billion in private funding – and management needs of the region’s population of 620 million, that target people who already use GrabPay to is focused on long-term development. not just Indonesia’s 250 million inhabitants or pay for rides. In addition to the investment the 30 million residents of metropolitan Jakarta. A $100 million social impact fund and the expansion of At the same time, the pursuit of scale must be investment fund is intended to mobile payment services, Grab combined with nuanced local awareness. help Grab uncover ideas and will establish a R&D center in “We have been very deliberate in rolling out entrepreneurs in Indonesia that Jakarta and look to hire 150 local products because when handling other people’s are a good fit for its own product engineers. Again, the focus is money it is critical that our systems are trusted development and geographic localization, whether it helps by consumers,” says Ming Maa, who joined Grab expansion objectives. Separately, drivers deal with traffic in Jakarta as president last year from SoftBank, one of its the company has established Payments: Beyond autos or with demand for half-day biggest investors. “Less than 20% of Indonesia’s partnerships with Lippo Group rental services in Bali. population has access to a bank account and the and Nobu Bank that will focus on mobile “If you want to provide an end-to-end way you bring them into the modern financial payments and micro-lending services. “Anything transport solution in Jakarta, you have to have world is different from what you would do in that deals with expanding credit and expanding both a motorbike solution and a four wheel Vietnam or Thailand because the ways people the population that has access to that credit will solution, and those pieces must come seamlessly. spend and save money are very different.” be very important for us,” Maa says. That nuance is very different in other countries,” Grab’s initial financial services initiatives have The fund is part of a broader initiative Maa explains. “That translates into quite a lot of focused on the fleet of more than 630,000 drivers developed in collaboration with the Indonesian engineering as well in terms of mapping and who use the app to connect with prospective government that will see $700 million put to routing. The most efficient path from A to B is customers looking for taxi rides on two wheels or work in the country over four years. Although different for two wheels versus four wheels. You four, car-sharing services, package couriering or Grab is competing fiercely in Jakarta with the can’t rely on Google.”

12 avcj.com | February 07 2017 | Volume 30 | Number 05 DEAL OF THE WEEK [email protected] Affinity captures Korea credit card exposure

GENERAL ELECTRIC’S (GE) DECISION IN CEO in place who happens to be the son-in-law million customers and a 10% market share. It now 2015 to pare exposure to consumer finance in of the chairman of Hyundai Motor,” says a source has 5.4 million cardholders and a 14% market order to focus on its core industrial capabilities close to the transaction. “The key was finding a share. Revenue came to KRW2.65 trillion in 2015, was expected to deliver a string of divestments corporate governance structure that works for while net profit reached KRW187.7 billion. worth approximately $200 billion. GE Capital has the incoming partner.” Hyundai Card’s strength derives from its now signed agreements involving $198 billion in Affinity was helped by a longstanding position at the premium end of the market; it assets globally, with its South Korean assets put relationship with Hyundai Motor that stretches introduced the American Express-style “black up for sale last year. back to its 1999 acquisition of card” concept to Korea and still In October, GE offloaded its remaining 20% Mando Corporation, an auto enjoys a higher spend per user interest in auto financing business Hyundai parts manufacturer with close than its rivals. The company Capital Services, having earlier sold 23.3% to joint ties to Hyundai and Kia. will seek to unlock new growth venture partner Hyundai Motor and its affiliate The GP brought in two through corporate card Kia Motors. However, the US company’s other co-investors, GIC Private and partnerships and private label local operation – credit card business Hyundai AlpInvest Partners, and they have credit cards, as well as digital Card, another JV with Hyundai Motor – was a agreed to buy 24% of Hyundai offerings that have already seen it more complex proposition. Hyundai Motor was Card for KRW376.6 billion ($329 Credit cards: High-end habits pioneer one click payment locally. neither exiting the asset nor seeking to assume million). Foreign investment “Unlike markets like China full control, so it was necessary to find a partner restrictions prevent a single party from owning where Alipay and Tenpay are replacing credit capable of working with the local giant. 10% or more. Of the 43% interest being sold cards, in Korea it’s a very entrenched payment Affinity Equity Partners prevailed in a more by GE, the remainder will go to Hyundai model,” the source adds. “Credit card companies than six-month process that featured competing Commercial. The deal values Hyundai Card at must have direct relationships with merchants private equity and strategic interest. “The KRW1.57 trillion. and customers, so mobile payment platforms dynamics were complicated because Hyundai When GE agreed to invest KRW678.3 billion are gateways rather than payment vehicles. This Motor is staying involved and there’s a strong in Hyundai Card in 2005, the company had 3.42 makes the market harder to penetrate.”

Wider reach to everyone in your organisation

avcj.com site licence allows everyone in your organisation to have instant access to in-depth analysis, real-time news and information on private equity in Asia and beyond. Sign up for an avcj.com site licence now and empower your team with critical information and data to soar above your competitors in Asian private equity.

How does it work? We will arrange online access for your employees to avcj.com, either with individual passwords or by general access through IP address recognition.

How much does it cost That depends on how much access you want, but we can customise cost-effective packages to all firms, regardless of size. For more information, contact Sally Yip at +(852) 2158 9658 or email [email protected]..

avcj.com AVCJ Private Equity & Venture Forum CONFERENCE 2017 SERIES }} AVCJ Private Equity & Venture Forum – Australia & New Zealand 2017 1 - 3 March 2017, Sydney avcjausnz.com

}} AVCJ Private Equity & Venture Forum – China 2017 15 - 16 March 2017, Beijing avcjchina.com }} AVCJ Private Equity & Venture Forum – Indonesia 2017 27 April 2017, Jakarta avcjindonesia.com }} AVCJ Private Equity & Venture Forum – Vietnam 2017 25 May 2017, Ho Chi Minh City avcjvietnam.com }} AVCJ Private Equity & Venture Forum – Japan 2017 22 - 23 June 2017, Tokyo avcjjapan.com }} AVCJ Private Equity & Venture Forum – USA 2017 12 July 2017, New York avcjusa.com }} AVCJ Private Equity & Venture Forum – Singapore 2017 19 - 20 July 2017, Singapore avcjsingapore.com }} Infrastructure Investors Forum – Australia 2017 August 2017, Sydney inframation-events.com/iif-australia }} AVCJ Private Equity & Venture Forum – Korea 2017 7 September 2017, Seoul avcjkorea.com }} AVCJ ESG Forum 2017 September 2017, Singapore avcjesg.com }} AVCJ Private Equity & Venture Forum – Philippines 2017 5 October 2017, Manila avcjphilippines.com }} China M&A Forum 2017 19 October 2017, Shanghai chinamergers.net 30th Annual 14 - 16 November, 2017 } AVCJ Private Equity & Hong Kong

Venture Forum avcjforum.com

}} AVCJ Private Equity & Venture Forum – India 2017 5 - 6 December 2017, Mumbai avcjindia.com }} AVCJ Private Equity & Venture Forum – Taiwan 2017 7 December 2017, Taipei avcjtaiwan.com

For sponsorship enquiries, please contact: For speaking enquiries, please contact: For general enquiries, please contact: Darryl Mag Sarah Doyle Customer Services T: +852 2158 9639 T: +852 2158 9660 E: [email protected] E: [email protected] E: [email protected] T: +852 2158 9652

AVCJ Suite 1602-6, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong T: +852 2158 9664 E: [email protected] W: avcjforum.com AVCJ Private Equity & Venture Forum CONFERENCE SERIES HANS JUNG | INDUSTRY Q&A 2017 [email protected] }} AVCJ Private Equity & Venture Forum – Australia & New Zealand 2017 1 - 3 March 2017, Sydney avcjausnz.com The reformer }} AVCJ Private Equity & Venture Forum – China 2017 STIC Investments has raised $530 million for a fund that will target restructuring opportunities involving Korean 15 - 16 March 2017, Beijing avcjchina.com conglomerates. Executive Managing Partner Hans Jung explains the strategy }} AVCJ Private Equity & Venture Forum – Indonesia 2017 27 April 2017, Jakarta avcjindonesia.com Q: PE investors have been chaebol corporate governance believes that the initial target in the beginning of a new }} AVCJ Private Equity & Venture Forum – Vietnam 2017 talking about divestments by and business structure reform. of reform should be the first government’s term and weakens chaebols for years but there Since then, many affiliates have tier, which comprises the 20 toward the end of the term. 25 May 2017, Ho Chi Minh City avcjvietnam.com doesn’t appear to have been a been separated, merged, and largest chaebols. Of course, A new administration will be marked increase in deal flow. sold to build the current holding the restructuring pressure on elected this spring or winter, and }} AVCJ Private Equity & Venture Forum – Japan 2017 Is it different this time? company and business structure. first-tier conglomerates that own no matter which side wins, there 22 - 23 June 2017, Tokyo avcjjapan.com A: Deal flow is expected to increase LG Chemical’s acquisition of globally competitive companies are likely to tougher chaebol significantly. Prior to 2016, Dongbu Farm Hannong and may be smaller than the pressure reform policies. However, since }} AVCJ Private Equity & Venture Forum – USA 2017 corporate restructuring was merger with LG Life Sciences in on second and third-tier most chaebols are more stable 12 July 2017, New York avcjusa.com based on regulatory policies 2016 – as well as the sale of LG conglomerates. now than in the past, we don’t such as restrictions on cross- Siltron – are examples of deals expect radical change in every }} AVCJ Private Equity & Venture Forum – Singapore 2017 shareholding and intra-group resulting from these efforts. In Q: How effective have been the industry. We expect to see deal trading. However, in the addition to LG, Hyundai Heavy measures intended to restrict more of an impact in struggling 19 - 20 July 2017, Singapore avcjsingapore.com past year, a special law has been Industries is undergoing a circular investment, tunneling, industries such as shipbuilding enacted to enhance corporate corporate restructuring, and it is and cross-shareholding? and shipping. }} Infrastructure Investors Forum – Australia 2017 vitality and promote voluntary anticipated that there will be a A: Regulations on mutual August 2017, Sydney inframation-events.com/iif-australia restructuring. Conglomerates lot of investment opportunities shareholding, cross Q: What particular qualities does tend to make restructuring for private equity firms from shareholding and intra-group STIC have to make the most of }} AVCJ Private Equity & Venture Forum – Korea 2017 decisions because of business various conglomerates. trading are clearly defined. restructuring opportunities? 7 September 2017, Seoul avcjkorea.com needs rather than regulations A: The team behind the special or government support. M&A situations fund has managed }} AVCJ ESG Forum 2017 aimed at selling non-core “Economic nationalism in the US, three secondary funds at businesses with a view to STIC. Those funds invested in September 2017, Singapore avcjesg.com strengthening core businesses China and Japan will encourage old shares owned by major – such as those between conglomerates to restructure their shareholders, institutional }} AVCJ Private Equity & Venture Forum – Philippines 2017 Samsung Group and Hanwha investors and funds. The most 5 October 2017, Manila avcjphilippines.com Group in 2014 and between businesses to secure liquidity and recent fund’s investments Samsung and Lotte Group in focus on their core competencies” involved conglomerates such }} China M&A Forum 2017 2016 – continues. Since the as Innocean and Dongbu Palm 19 October 2017, Shanghai chinamergers.net beginning of 2017, LG has sold Hanon. They are similar to LG Siltron, a semiconductor Q: Is there a ‘trickle-up’ effect, STIC’s $100 million investment deals that aim for the upside 30th Annual 14 - 16 November, 2017 manufacturer that was deemed i.e. second and third tier in Hyundai Group to solve the profit after securing downside } AVCJ Private Equity & Hong Kong non-core. Uncertain internal chaebols become targets for tunneling issue and improve protection through investments and external environments will restructuring first and then corporate governance is a in special situation opportunities Venture Forum avcjforum.com also play a role that facilitates top-tier players? typical deal. Attempts to that arise during conglomerates conglomerates restructuring. A: We believe that the need for mitigate these regulations are restructuring. STIC also }} AVCJ Private Equity & Venture Forum – India 2017 Economic nationalism is the US, voluntary reform to survive continually being made and accumulated special situations China and Japan, for example, the changing environment is some chaebols are avoiding experience through investments 5 - 6 December 2017, Mumbai avcjindia.com will encourage conglomerates stronger than reform driven these regulations while trying in LIG Nex1, Hyundai Oilbank to restructure their businesses by government pressures or to strengthen the corporate and Posco Energy. In order }} AVCJ Private Equity & Venture Forum – Taiwan 2017 to secure liquidity and focus on guidelines. If the government’s governance. So far, we have to source deals and invest 7 December 2017, Taipei avcjtaiwan.com their core competencies. pressure has an influence, it is only seen a partial impact, but effectively, we have established a mostly due to the economic improved regulations will help close network of conglomerates, Q: To what extent have the democratization. This involves address these problems. including Samsung, LG, For sponsorship enquiries, please contact: For speaking enquiries, please contact: For general enquiries, please contact: reforms already made promoting balanced economic Hyundai Motors, Hyundai by major conglomerates growth through a fair Q: What impact do political Heavy Industries, Dongbu, SK, Darryl Mag Sarah Doyle Customer Services generated deal flow? competition by adjusting the cycles have on investment CJ Group, Kolon Industries and [email protected] T: +852 2158 9639 T: +852 2158 9660 E: A: By becoming the first holding imbalanced power between opportunities tied to chaebol Hanwha. Additionally, we have E: [email protected] E: [email protected] T: +852 2158 9652 company among the major conglomerates and small and reform? the experience and knowhow Korean conglomerates in 2003, medium-sized enterprises A: Normally, the demand for to negotiate and complete deals LG has been at the forefront of (SMEs). It seems the government chaebol reform is strongest quickly. AVCJ Suite 1602-6, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong Number 05 | Volume 30 | February 07 2017 | avcj.com 15 T: +852 2158 9664 E: [email protected] W: avcjforum.com 16th Annual Private Equity & Venture Forum

China15-16 March2017 2017 • Beijing GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY EARLY BIRD OFFER ENDS ON THIS FRIDAY, 10 FEBRUARY BOOK Now in its 16th year, the AVCJ Private Equity and Venture Forum - China is the NOW! premier gathering of the China’s most influential private equity GPs and LPs, AND SAVE government regulators, senior corporate executives and other professionals. US$300 Join and connect with 360+ industry professionals for two days of thought- (until 10 FEB only) provoking debate, in-depth discussion on market trends, networking and more. HEADLINE SPEAKERS

Jiming Ha Ou Wang Patrick Zhong Vice Chairman and Managing Director and Head Chief Investment Officer Chief Investment Strategist of Private Equity Investment WANDA GROUP GOLDMAN SACHS PRIVATE Department, CHINA WEALTH MANAGEMENT CHINA INVESTMENT CORPORATION

CONFIRMED SPEAKERS INCLUDE: Edward J. Grefenstette Jonathan Zhu David Wei President & Managing Director Chairman and Chief Investment Officer BAIN CAPITAL Founding Partner THE DIETRICH FOUNDATION VISION KNIGHT CAPITAL

Julian Cheng Dave Brochet Jeffrey Li Co-head of China Managing Director Managing Partner WARBURG PINCUS CDPQ ASIA PACIFIC TENCENT INVESTMENT PTE LTD

Keep up-to-date with confirmed speakers at avcjchina.com

2016 Forum key statistics Unique 355 51 120+ 20 8 Networking 215 Delegates Speakers LPs Countries Opportunities Companies

Registration enquiries: Sponsorship enquiries: Anil Nathani T: +852 2158 9636 Darryl Mag T: +852 2158 9639 Enquiry E: [email protected] E: [email protected]

Co-Sponsors

VC Legal Sponsor Networking Coffee Wi-Fi Sponsor Exhibitors Break Sponsor

Join your Join our peers WeChat for latest avcjchina.com #avcjchina AVCJ Feeds