The Golden Goose? TRS Illinois on Co-Invest, Separate Accounts Softbank Brings Its Midas Touch to Asia’S Leading Technology Start-Ups Page 7 Page 15

Asia’s Private Equity News Source avcj.com January 27 2015 Volume 28 Number 04

EDITOR’S VIEWPOINT Singapore’s VC drive continues unabated Page 3 NEWS Bain, Blackstone, Capital Today, Creador, Darby, Hosen, IFC, L Capital, Saratoga, Temasek Page 4 DEAL OF THE WEEK Goldman backs Antuit in big data expansion drive Page 12 ClearVue finds an angle in cross-border cosmetics Page 13 FUNDS Banyan races to a finish on second China VC fund Page 13 LP INTERVIEW The golden goose? TRS Illinois on co-invest, separate accounts SoftBank brings its Midas touch to Asia’s leading technology start-ups Page 7 Page 15

FOCUS DEAL OF THE WEEK

A question of clarity Paying a premium China set to remove uncertainty over VIEs Page 11 Later-stage players bet big on Meituan Page 12 12th Annual Private Equity & Venture Forum Australia & New Zealand 2015 4-6 March • The Westin Sydney

REDISCOVERING THE OPPORTUNITIES IN PRIVATE MARKETS CHANCELAST Senior industry professionals confirmed to speak include: TO Marcus Simpson John Haddock Offer expiresUS$200 on Friday Head of Global Private Equity Managing Director and SAVE QIC Chief Executive Officer CHAMP PRIVATE EQUITY

Neil Stanford David Simons Investment Manager - Director, Private Equity Private Equity FUTURE FUND HOSTPLUS

Natalie Meyenn Klaus Bjørn Rühne Ben Frewin Head of Private Equity Partner Managing Director MLC ATP PEP ARCHER CAPITAL

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Benjamin C. Gray Simon C. Moore Michael Weaver Managing Partner Managing Director Manager, Private Markets TPG CAPITAL THE CARLYLE GROUP SUNSUPER PTY LTD

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Join your peers Scan this QR code with your mobile phone to review avcjausnz.com #avcjausnz the event latest updates 12th Annual Private Equity & Venture Forum EDITOR’S VIEWPOINT Australia & [email protected] New Zealand 2015 Managing Editor 4-6 March • The Westin Sydney Tim Burroughs (852) 3411 4909 Staff Writers Andrew Woodman (852) 3411 4852 Start-up central Winnie Liu (852) 3411 4907 Creative Director Dicky Tang Designers Catherine Chau, Edith Leung, Mansfield Hor, Tony Chow

Senior Research Manager WHEN LOOKING FOR AN EXAMPLE OF for several start-ups in the tier below. Helen Lee how Singapore start-ups previously struggled Despite this success, the various agencies Research Associates to get funding, one of the founders of tenCube tasked with turning Singapore into a technology Herbert Yum, Jason Chong, Kaho Mak REDISCOVERING THE OPPORTUNITIES IN PRIVATE MARKETS was happy to oblige. Bootstrapped into existence hub are not easing up. This week saw the official CHANCELAST in 2005, the mobile security solutions provider opening of an expanded JTC LaunchPad @ one- Senior Marketing Manager Sally Yip Senior industry professionals confirmed to speak include: TO spent a frustrating 18 months trying and failing north – the local start-up cluster better known Circulation Administrator Marcus Simpson John Haddock Offer expires on Friday US$200SAVE to raise capital. to many as Block 71. It has been expanded to Prudence Lau Head of Global Private Equity Managing Director and Darius Cheung recalled meeting with about accommodate 500 companies and 35 incubators, Subscription Sales Executive QIC Chief Executive Officer 50 investors but only five could write checks of with plans to create space for 250 more. The Jade Chan CHAMP PRIVATE EQUITY the size tenCube was looking for. The company Infocomm Development Authority of Singapore Manager, Delegate Sales eventually received some informal seed funding (IDA) has also launched initiatives to help local Pauline Chen Neil Stanford David Simons and then a formal seed round in 2010 from the start-ups enter Europe and the US. Investment Manager - Director, Private Equity Director, Business Development Private Equity FUTURE FUND government-backed Spring Seeds initiative and Finally, the Singapore Exchange has teamed Darryl Mag India-based One 97 Communications. Later that up with Clearbridge Accelerator to create a HOSTPLUS Manager, Business Development year it was sold to McAfee. capital-raising platform for small- and medium- Anil Nathani, Samuel Lau Natalie Meyenn Klaus Bjørn Rühne Ben Frewin Five years on from that exit, Cheung is sized enterprises (SMEs) in Asia. Full details have Sales Coordinator Head of Private Equity Partner Managing Director running Singapore-based property website yet to emerge but platform should present start- Debbie Koo MLC ATP PEP ARCHER CAPITAL 99.co, which received initial funding from several ups with another source of funding. investors. He claims there is now too much seed A number of industry participants now argue Conference Managers Jonathon Cohen, Sarah Doyle, capital chasing start-ups in Singapore. that Singapore has reached critical mass: there Tim Martin Jessica Archibald Clive Boyce Conference Administrator Twelve months ago the concern was that is sufficient momentum in the market that the Amelie Poon Partner Managing Director Investment Manager there were insufficient Series A investors to ecosystem can be self-sustaining. This suggests Conference Coordinator CRESCENT CAPITAL TOP TIER CAPITAL PARTNERS FUNDS SA the government no longer needs to play such a Fiona Keung, Jovial Chung PARTNERS take these start-ups from revenue generative to profitable. In this area, too, Cheung sees progress. forthright role as initiator, but the reality is more Publishing Director Benjamin C. Gray Simon C. Moore Michael Weaver He estimates there is $150-200 million available nuanced. Rather than throw money directly at an Allen Lee Managing Partner Managing Director Manager, Private Markets for Series A investments, with most companies issue, there are calls for capital to be directed at TPG CAPITAL THE CARLYLE GROUP SUNSUPER PTY LTD worth backing now able to get VC support. the infrastructure surrounding it. Some programs The momentum Singapore has achieved is are already focused on this; in other areas more the result of government initiatives and private can be done. Incisive Media Padmanabh (Paddy) Sinha Robert Credaro Steve Martinez Unit 1401 Devon House, Taikoo Place sector participation. Lacking a decent pipeline It is not just about providing affordable 979 King’s Road, Quarry Bay, Managing Partner, Head of Growth Assets Head of Asia-Pacific of start-ups in which VCs could invest, the premises, but also reasonable immigration Hong Kong Snr. Partner, Private Equity T. (852) 3411-4900 Private Equity FIRST STATE SUPER Technology Incubation Scheme (TIS) was put legislation (so that talent can come into TATA CAPITAL APOLLO MANAGEMENT, L.P. F. (852) 3411-4999 in place to support early-stage investors. Other Singapore), better access to international E. [email protected] URL. avcj.com For the latest programme and speaker line-up, visit avcjausnz.com programs were also introduced, while at the networks (so that ideas can get out and same time angel investors and private sector achieve scale), and a deeper appreciation of the Beijing Representative Office No.1-2-(2)-B-A554, 1st Building, Registration: Carolyn Law T: +852 3411 4837 E: [email protected] incubators began to proliferate. Similarly, the economic contribution made by independent No.66 Nanshatan, Chaoyang District, Beijing, Sponsorship: Darryl Mag T: +852 3411 4919 E: [email protected] Enquiry Series A gap has been filled by a combination innovation (so that people are willing to do People’s Republic of China of reconfigured existing programs – such as the it in the first place). While hard infrastructure T. (86) 10 5869 6203 F. (86) 10 5869 6205 Co-Sponsors Early Stage Venture Fund (ESVF) initiative – and can be built in a matter of months, it must be E. [email protected] greater interest from overseas investors. complemented by less tangible qualities that can Rakuten’s $200 million acquisition of take years to bed down. Singapore-headquartered video-streaming site By making it easier for entrepreneurs to The Publisher reserves all rights herein. Reproduction in whole or Viki in 2013 and Seek’s purchase of Jobstreet do business more people will want to be in part is permitted only with the written consent of AVCJ Group Limited. for over $500 million in 2014 remain by some entrepreneurs. ISSN 1817-1648 Copyright © 2015 distance the biggest exits. However, GrabTaxi (a taxi-booking platform founded in Malaysia but Supporting Organisations Media Partners now headquartered in Singapore) and Razer (a gaming peripherals business based in the US Tim Burroughs but founded by a Singaporean) now command Managing Editor valuations of $1 billion and there are high hopes Asian Venture Capital Journal Join your peers Scan this QR code with your mobile phone to review avcjausnz.com #avcjausnz the event latest updates Number 04 | Volume 28 | January 27 2015 | avcj.com 3 NEWS

GREATER CHINA Talent shortages, financing JD Capital invests in online issues hinder China buyouts finance site 91Wutong Bain completes exit from Buyout transaction value in China is 10 times JD Capital, Tongxin Securities Direct Investment larger than nine years ago, but executing deals and Shenzhen Jidi Xintian Venture Capital have China’s Gome is still challenging in terms of getting financing invested in a Series A round for 91Wutng, a Bain Capital has made a full exit from Chinese and placing the right operational expertise with Chinese online finance platform. The company retailer Gome Electrical Appliances Holding after portfolio companies. focuses on high net worth individuals and selling its remaining shares for about HK$1.06 “There are two main focuses for the buyout institutional investors that are looking to buy billion ($137 million). The PE firm invested deals. One is what is your operational angle? wealth management products offered by trust RMB1.59 billion ($233 million) in Gome in June Can you bring something from your platforms, companies and securities firms. 2009, giving it a 9.98% stake. Last July Bain sold a network, portfolios and prior experiences?” 5.4% stake for $130 million. Chinese radio mobile app raises $20m Series C round Infrastructure funds sell Lizhi.FM, a Chinese radio broadcasting mobile rail asset to Cheung Kong app, has raised $20 million in a Series C round of 3i Infrastructure, Morgan Stanley Infrastructure funding from Chinese smart phone manufacturer Partners and Star Capital Partners have agreed Xiaomi and Shunwei Capital Partners. Existing to sell Eversholt Rail Group, one of the UK’s three investors Matrix Partners and Morningside major rolling stock operators, to a consortium Technologies also participated. led by Hong Kong-based Cheung Kong Infrastructure (CKI) at an enterprise valuation of Carlyle-backed Meinian GBP2.5 billion ($3.8 billion). Onehealth invests in rival L Capital invests $100m in Edward Huang, senior managing partner at The Meinian Onehealth Healthcare, China’s largest Blackstone Group, told the Hong Kong Venture private provider of healthcare check-up services mall operator Sasseur Capital & Private Equity Association’s (HKVCA) Asia and a portfolio company of The Carlyle Group, L Capital Asia, a PE firm sponsored by luxury forum. “The second thing is, ‘Are the financing has invested in industry rival Ciming Health goods conglomerate LVMH, has invested more markets mature enough?’ If the banks understand Checkup Management Group. CDH Investments than $100 million in a second round of funding M&A products the better, that could create better and Tiantu Capital are both investors in Ciming. for Sasseur Group, a Chinese outlet shopping financing opportunities.” mall developer. Warburg Pincus, which invested Martin Mok, a partner with EQT Partners, Darby mezz fund exits $250 million in 2013, also participated. noted that transaction value has grown from $100-200 million in 2006, when the firm furniture manufacturer RRJ, IFC invest $85m in completed the first buyout in China, to $6 billion Darby Private Equity, the PE arm of Franklin over the last two years. If take-private deals are Templeton Investments, has exited its holding China Everbright Water excluded, there have been 15-20 buyouts worth in Chinese furniture manufacturer Shayne RRJ Capital and the International Finance $1.5 billion. The primary sources of these deals International Holdings for an undisclosed Corporation (IFC) have agreed to subscribe to are succession planning and corporate spin-offs. sum. Darby invested $20 million in Shayne in S$113.5 million ($85 million) in new shares issued However, the question remains as to whether November 2006 via its second mezzanine fund. by China Everbright Water, a Singapore-listed this activity - which accounts for about 10% of environmental protection and alternative energy the entire private equity market in China - is SCG leads $16m round for business. The two investors will hold stakes of sufficient to justify a buyout-dedicated fund. 2.72% and 1.91%, respectively. “It depends on the size of your fund. If you’re a China game review site very large fund, doing buyout deals in one place, Shenzhen Capital Group (SCG) has led a RMB100 Capital Today, New Horizon obviously it would be crowded. But in general, million ($16 million) Series A round of funding for given that you have 10% of the market, you can Mofang.com, a Chinese mobile gaming reviews lead round for Beibei deploy $150-200 million in mainland China alone site, with participation from Matrix Partners. Capital Today and New Horizon Capital have led easily over four years,” Mok said. The company wants to develop a customized a $100 million Series C for Beibei.com, a Chinese review service and establish a social networking online discount retail platform for maternity and platform for users. baby products. Existing backers Banyan Capital an undisclosed sum. Hosen made the acquisition and IDG Capital Partners also took part. through its New Hope Investment Fund, which is anchored by New Hope Group, China’s largest NORTH ASIA China’s Hosen buys US beef animal feed producer. Last year the fund also ventured overseas to buy a majority stake in Japan’s Mitsui Global backs processor Australian beef producer Kilcoy Pastoral. Through Chinese agritech-focused PE firm Hosen Capital Kilcoy, Ruprecht will have access to a new source clinical SaaS start-up has acquired Ruprecht, a US beef processor, for of high-quality beef and lamb products. Japan’s Mitsui Global Investment and Dolby

4 avcj.com | January 27 2015 | Volume 28 | Number 04 NEWS

Family Ventures have together invested $12 Creador, SMRT seek buyout Kaizen backs India’s million in cloud-based, clinical study software start-up goBalto. Headquartered in Silicon Valley, of Masterskill Education Impartus Innovations with bases in Pennsylvania and Singapore, Creador and SMRT Holdings have agreed to buy Education-focused Indian GP Kaizen Private goBalto was set up by Jae Chung – founder of a 30.75% stake in Malaysia-based Masterskill Equity has made a $4.1 million Series A Korean bio-pharma company Celltrion – and is Education Group from the major shareholder for investment in video learning platform Impartus led by CEO Sujay Jadhav. MYR69.4 million ($19.2 million) and now plan on Innovations. The company’s flagship products completing a full buyout of the business. The GP are Automated Lecture Capture and Flipped will buy 29.2 million shares – or a 7.75% stake – in Classroom – two platforms for distributing audio SOUTH ASIA Masterskill from Siva Kumar for MYR0.60 apiece. and video content from live lectures. Listed IT services provider SMRT has agreed to Temasek buys SVB’s India buy 86.5 million shares - or 23% of the company - Frontier markets classifieds from Kumar at the same price. venture debt business Creador entered into an agreement to buy a platform receives $40m Singapore’s Temasek Holdings has agreed to 19.26% interest in Masterskill towards the end of Saltside Technologies, which operates online acquire the India venture debt unit of NASDAQ- 2014 for a sum not exceeding MYR43.4 million. classifieds platforms in Bangladesh, Sri Lanka listed financial services company SVB Financial and Ghana, has received a $40 million round of Group for INR2.8 billion ($45 million). SVB India funding led by Chinese investor Hillhouse Capital. Finance was set up in 2008 and offers debt Brummer & Partners and existing shareholder capital to domestic, VC-backed, early and mid- Investment AB Kinnevik also took part. Saltside, stage companies in India. It provides collateral which was set up by Nils Hammar and James free loans of up to INR150 million on six-months Peck, both early employees at Skype, has a to three-year terms. remit to build leading online marketplaces for underserved areas. India’s Suzlon sells German unit to Centerbridge SOUTHEAST ASIA Suzlon Energy, an India-headquartered wind- turbine manufacturer, has sold its German Two partners leave subsidiary – Senvion – to Centerbridge Partners This means Creador and SMRT’s combined in EUR1 billion ($1.16 billion) deal. The asset ownership will cross the 50% threshold on Saratoga Capital sell-off is an attempt by Suzlon to unshackle itself completion of the acquisition from Kumar. As Indonesia-focused GP Saratoga Capital has lost from about $2.6 billion of debt resulting from a such, the investors have offered to buy all the two of its five partners, with Eri Reksoprodjo decade-long buyout binge. remaining shares, also at MYR0.60 apiece. departing the firm at the end of December The takeover would value the entire company and Nigel Khoo scheduled to leave in February. Blackstone exits India’s at approximately MYR225 million. The private equity firm is not looking to reduce Brahmal Vasudevan, CEO of Creador, told local headcount and plans to bring in replacements. Agile Electric for $106m media that he was confident the combination The Blackstone Group has agreed to sell its entire of Creador’s financial expertise and SMRT’s Singapore expands Block stake in Indian auto parts maker Agile Electric experience in the education sector could deliver Sub Assembly to Japan’s Igarashi Electric Works a turnaround at Masterskill and break even within 71 tech start-up hub (IEW) and Indian boutique investment bank a year. Singapore start-up hub JTC LaunchPad @ one- MAPE Advisory Group, for $106.4 million. The exit The company is a leading provider of nursing north – better known to many as Block 71 – has comes around 18 months after Blackstone paid and health education in Malaysia, principally in been expanded to accommodate 500 companies $55 million for a 97.9% stake in the business. higher education and vocational training. It has and 35 incubators, with plans to create space for two associate institutions – the Asia Metropolitan 250 more. The facility now comprises Blocks 71, Temasek acquires 18% University and Masterskill Global College. 73 and 79, with co-working, incubation and start- Masterskill generated revenue of MYR63.4 up space designed to support various stages of stake in hospital operator million in 2013, down from MYR148.8 million the entrepreneurship. Temasek Holdings has acquired a 17.74% stake previous year. Net losses escalated from MYR28.2 in Global Health, which operates the Mendanta million to MYR162.9 million. IFC backs Vietnam’s Pan super specialty hospital in Gurgaon, India. The seller was energy and infrastructure firm Punj Pacific Corp Lloyd, which offloaded its entire stake for a Singapore-based Velos Partners have committed Sing The International Finance Corporation reported INR7 billion ($113 million). $11 million in Series B funding to Indian (IFC) has invested $6.5 million in Vietnamese babywear and kidswear retailer Hopscotch. agribusiness and food conglomerate Pan Pacific Facebook co-founder, Velos Rise Capital and Jabbar Internet Group also Corp. in exchange for a 5% stake. The funding is participated in the round, as did existing backers intended to help the company fulfill its long-term back Hopscotch LionRock Capital and Skype co-founder Toivo strategy of acquiring and consolidating more Facebook co-founder Eduardo Saverin and Annus. agricultural and food businesses.

Number 04 | Volume 28 | January 27 2015 | avcj.com 5 14th Annual Private Equity & Venture Forum China 2015 28-29 May • China World Summit Wing,Beijing

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avcjchina.com 14th Annual Private Equity & Venture Forum COVER STORY China 2015 [email protected] 28-29 May • China World Summit Wing,Beijing Soft power SoftBank has laid down a marker in Asia’s technology space over the past six months, investing nearly $2 billion and promising much more. What does this say about the Japanese giant’s broader ambitions?

THE $627 MILLION INVESTMENT IN On the back this success, it appears that interest and the total sails past the listed entity’s Indian e-commerce marketplace Snapdeal last SoftBank – now with more resources at its $75 billion capitalization. October was significant for two reasons: it was disposal – is looking to tap into the next big “One would have to say he has been the best GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY avcjchina.com the second-largest venture capital round the tech trend, perhaps even recreating its success investor in the internet age – he has a vision that country had ever seen (rival Flipkart raised $1 with Alibaba. But how does the recent spate of goes back 20 years, looking at where the internet billion three months earlier); and it marked the investments tie into the company’s long-term was going to hit,” says Gary Rieschel, founding What to expect at GPs start of SoftBank Corp’s latest spending binge. ambitions, and perhaps more importantly, can it managing partner with Qiming Ventures, who LPs A second India deal was announced the same realize them? formally worked for SoftBank Venture Capital. day. SoftBank led a $210 million Series D round “What SoftBank is looking for are online “Sometimes he has been spectacularly wrong AVCJ China Forum 2015: of funding for taxi-booking platform Ola, with businesses that generate real money and have but when he has been right, no-one has been participation from Tiger Global Management. The real money coming through them – where it righter.” investments were accompanied by a pledge from is not just an advertising-based model, but a It is perhaps no exaggeration to say that Son’s

50+ distinguished speakers who 1 : 2 RATIO LP-GP the cash-rich Japanese technology conglomerate transaction-based model,” says Neil Juggins, a vision for the last 20 years has been for SoftBank have unique insights in global and Attended by 110+ LP that it would sink as much as $10 billion into partner with research firm Ji-Asia, who tracks the to become the largest technology company in from China and overseas India’s fast-growing IT, communications and SoftBank. “Alibaba has proved that its business the world, at least, if not the largest company in domestic investments e-commerce sectors. model can generate money, so SoftBank has the world, period. Even in the company’s earliest The Snapdeal and Ola transactions were gone into Snapdeal and Tokopedia because they years, Son pinned his colors to the mast. Within Principal/VP/ Associates made through SoftBank Internet and Media Inc. are two companies very much within that model.” the first 15 years, after SoftBank established 33% (SIMI), a new entity set up to identify and execute itself as a software distributor, its tentacles were 15+ thought-provoking sessions Managing Director/ technology investments for the Japanese The golden goose reaching out into several sectors including Partner/ CFO/COO covering regional and domestic 32% company. It is headed by Google veteran Nikesh Clues to SoftBank’s broader strategy can communication, events and financial services. Director / GM / Arora who was tempted away from the US search be found in the exhortations of its founder, With the creation of Yahoo! Japan in 1996 most debated topics Chief Representative giant last July. Despite the headline-grabbing Masayoshi Son. In the six-month earnings internet services joined the portfolio. 20% Chairman / CEO / $10 billion pledge, SIMI’s remit extends beyond presentation given to investors in December, It wasn’t until 2004, 23 years after the Managing Partner India. So far it has committed approximately Son’s message was simple: “SoftBank = Goose.” company was founded, that SoftBank entered 15% TITLE BY $1.87 billion and has also been active in China, By drawing upon Aesop’s fable about the goose the industry to which it is most readily associated 300+ attendees who are Indonesia and Malaysia. that laid the golden the egg he sought to explain by purchasing Japan Telecom. Since then the policy makers, fund managers, To understand the reasoning behind that investments in companies like Alibaba, US company has evolved from a little-known SoftBank’s recent investments one need only internet giant Yahoo and games developer Gung upstart, competing against the incumbents such investment professionals, corporate China look back to an event that took place four weeks Ho represent massive windfalls – and SoftBank as the formerly state-owned NTT Docomo, into a 76% executives from across the region prior to the Snapdeal transaction: Alibaba Group has plenty more to offer. market leader. Hong Kong raised $25 billion in the world’s largest-ever Comparing SoftBank’s market capitalization The crowning glory came in mid-2013 when 13% IPO. The stock soared on its first day of trading, to the value of its holdings gives an indication SoftBank acquired its US counterpart Sprint valuing the e-commerce business at $231 billion. of the sheer size of these eggs. The three most Nextel for $21.6 billion. But becoming a global 6 roundtable sessions with top SoftBank initially invested $20 million in Alibaba significant assets in which the company has a telecommunications leader is not an end in itself, in 2000 and its 32% stake is now valued at controlling stake – Yahoo! Japan, Gung Ho, and but a platform from which to support further expertise and intimate networking COUNTRY BY around $82 billion. Sprint – are worth $41 billion. Add in the Alibaba growth. opportunities Over 344 participants from 15 countries and 230 companies. SoftBank Timeline Register for Super Early Bird Rate on or before 6 March 2015! Sep 1981 – Established Jul 1998 – Sets up Gungho Online (then ONsale) in JV with Onsale Jan 1992 – Sets up SoftVenture Holdings (now SBI Holdings) Jun 1998 – Sets up E*Trade Japan in JV with US-based E*Trade Group REGISTER NOW by emailing us: [email protected] Dec 1994 – Buys US-based Ziff Communications Jun 1998 – Goes public For sponsorship enquiries, please email: [email protected] or call: +852 3411 4919 Apr 1995 – Backs events division of US-based Interface Group Dec 1998 – Sets up SoftBank America Jan 1996 – Sets up Yahoo! Japan Corp. in joint venture with Yahoo! US Jan 2000 – Invests $20m in Alibaba Co-Sponsor VC Legal Sponsor Feb 1996 – Buys Ziff-Davis Publishing Sep 2000 – Invests in Nippon Credit Bank (now Aozora Bank) Jun 1996 – Partners with News Corp. to form JSkyB Sep 2003 – Exits Aozora Bank to Cerberus >>

avcjchina.com Number 04 | Volume 28 | January 27 2015 | avcj.com 7 COVER STORY [email protected]

Investment rounds led by SoftBank Internet and Media (SIMI) $100 million round last October. Nevertheless, SIMI’s strategy is more specific in the kinds of Date Amount (US$m) Company Country Business companies it is targeting. Oct 2014 627 Snapdeal India E-commerce With the exception of Housing.com, an Oct 2014 210 Ola India Taxi-booking Indian property portal that received $90 million in December, all of SIMI’s investments have Oct 2014 100 Tokopedia Indonesia E-commerce fallen into one of two buckets. Tokopedia is an Dec 2014 250 GrabTaxi Malaysia Taxi-booking e-commerce market leader in Indonesia, just like Dec 2014 90 Housing.com India Property portal Snapdeal in India; both have realistic ambitions Jan 2015 600 Kuadi Dache China Taxi-booking to become as dominant in the B2C space as Alibaba has in China. Then there are the three Source: AVCJ Research taxi-booking platforms – Ola in India, GrabTaxi in “Son is quite serious when he says he “In the mid-to-late 1990s SoftBank Southeast Asia and Kuadi Dache in China – that is setting up SoftBank to be a 300-year-old experienced rolling periods of boom and bust are leveraging mobile technology to disrupt company and he is laying the foundations for in terms of cash positions, so sometimes the existing industries. that,” says Oliver Matthew, a senior research company had money to execute on its strategy “I believe Masayoshi and Nikesh have come analyst at CLSA. “He does not see SoftBank merely and sometimes the VC funds would go out and to a fundamental belief that things like shared as a telecoms company.” raise institutional money to support the strategy,” economy, transportation, and on-demand In addition to making acquisitions, Son says Qiming’s Reischel. “There was a strategic services will be the main mega trend now,” says fueled the company’s early ambitions by setting benefit even through SoftBank couldn’t put up Jixun Foo, managing partner with GGV Capital. up several venture capital entities. In many cases all the cash.” “So they are betting on what they believe is the these were set up either as joint ventures with category winner in each region.” other firms or raised capital from third-party Balance sheet behemoth Ji-Asia’s Juggins goes further, suggesting the investors. SoftBank Asia Infrastructure Fund – the SIMI is the product of a different age. The unit investments in Ola, GrabTaxi and Kuadi are not forerunner to SAIF Partners – was formed in 2001 essentially invests off the company’s balance just about taxi-booking but also distribution and in collaboration with Cisco. US-based SoftBank sheet and Reischel describes it as what Son logistics. By building a stable of Alibaba-type Capital, SoftBank Ventures Korea, SoftBank China wanted to do all along if sufficient resources had businesses and combining it with a potentially Venture Capital, and later iterations of SAIF been at his disposal. The likes of SoftBank Capital very strong distribution network – similar to the Partners all cultivated their own LP bases. and SoftBank Ventures Korea tend to focus on way US car-ordering start-up Uber has branched The strategy has given SoftBank the ability to early rounds for start-ups in their respective out into logistics with Uber Cargo – SoftBank has tap external sources of capital and expertise and regions, committing small amounts for periods the makings of an e-commerce infrastructure to allowed the company to broaden its investment dictated by the life of their funds. This is not the compete with the likes of Amazon. activities. At the same time, it has presented case with SIMI. SoftBank differs from Amazon, of course, in opportunities to seek out synergies between “SIMI’s investments tend to focus on larger that it is neither owner nor operator of these businesses within the group and portfolio growth-stage companies, and they have a assets; the company is building an e-commerce companies. strategic component and with a longer time ecosystem of minority stakes. It typically seeks to There are, however, two principal limitations horizon,” explains a spokesman with SoftBank buy a 30-40% stake in the businesses in which to this approach. First, deal size is ultimately Corp. “SIMI’s investments are global –they are it invests, enough to have a say in what the capped by the size of the funds from which not limited to any particular region, but Asia company is doing but not necessarily assuming investments are made. Second, traditional private is an area of focus due to the tremendous the role of ultimate decision maker. With the equity and venture capital vehicles are obliged opportunities for growth that can now be found exception of Sprint in the US, all of the company’s to exit businesses after a relatively short holding there.” control deals have been in Japan. period in order to return capital to LPs. The spokesman adds that earlier fund “SoftBank are likely to look at whether they While the funds have arguably given SoftBank investments still complement SIMI’s activities. For have the resources to run a business themselves; access to a greater number of start-ups with example, SoftBank Ventures Korea made a small if they have faith that the management can do a fewer resources, they have restrained its impulse investment in Indonesian online marketplace better job, they will let them run it,” Juggins says. to bet big and bet long. Tokopedia in mid-2013 before SIMI led its “I think they are realistic about what they can

SoftBank Timeline Jul 2004 – Buys Japan Telecom (now SoftBank Telecom) Oct 2011 – Sets up SBI Energy Corp Feb 2005 – Cable & Wireless IDC becomes subsidiary via Yahoo! Japan Jan 2013 – Makes eAccess (now Ymobile Corp), a subsidiary May 2005 – Gungho Online goes public in Japan July 2013 – Acquires Sprint Nextel Corp Apr 2006 – Acquires Vodaphone Japan (now SoftBank Mobile) Oct 2013 – Pays $1.5b for 51% stake in games firm Supercell Aug 2006 – Exits SBI Holdings Jan 2014 – Brightstar Corp. made a subsidiary May 2010 – Forms Ustream Asia joint venture with Ustream Jul 2014 – Sets up Softbank Internet and Media (SIMI) Sep 2011 – Invests in Singapore’s InMobi Sep 2014 – Alibaba goes public > ❘❘

8 avcj.com | January 27 2015 | Volume 28 | Number 04 COVER STORY [email protected]

and can’t do when it comes to investing in these Matthew, this comes in two different forms: companies and well-run businesses where businesses.” hard synergies, for example offering start-ups management can be left to its own devices. If As SoftBank pursues this strategy it is worth access to customers and technology; and soft a business goes wrong, Son will either look to noting that the company has joined a growing synergies, such as providing expertise, advice and sell out or bring in new management. Taking roster of large ticket players coming into late- mentorship. the latter course of action depends on his level stage VC deals. In this sense, the approach has Kola stresses that the Snapdeal team has of influence in the boardroom and the strategic been facilitated by a general trend among young benefited from both SoftBank’s experiences with importance of the company. tech companies to spend longer under private Alibaba and its international network. This gives The big question is what happens if Son ownership rather than rush towards a public credence to the argument that the Japanese – who is 57 – is no longer in charge. Ji-Asia’s listing. Plenty of capital is willing to back these tech giant’s presence reduces the amount Juggins notes that building a company of such businesses – which have already established of time it takes for a start-up to gain traction, size requires enormous passion and drive. He themselves as market leaders – and valuations develop its products, build market share, and thinks it is unlikely that a company with minority have risen steadily. raise subsequent rounds. Many argue that this stakes in more than 1,000 businesses could Industry participants would rather blame snowball effect means market winners can be survive in that form under different leadership. public market investors dipping into pre-IPO identified earlier. So where does that leave SoftBank in rounds for additional alpha than SoftBank for “Masayoshi Son thinks long-term about how the medium term? For the time being, contributing to this trend. different aspects of the things he is involved telecommunications will still form the backbone “With the arrival of hedge funds valuations in can be put together,” says Qiming’s Rieschel. of the group. While SoftBank might not identify have gone up a little bit but all of that can only “There is no question that if he invests in a itself as a sector specialist, this is the one business be put in the context of the exit,” says Vani Kola, company in India, plus its equivalent in China, in which it has a direct relationship with a co-founder of Kalaari Capital, an early Snapdeal they will wind up with some kind of synergy. He customer base. For all the other investments, backer. “In hindsight if you look at what SoftBank is very strategic and he always thinks about how someone else is doing the billing. has done with its investments in terms of value can leverage the assets he has to bring them “I don’t think it is out of the question that creation, the valuations represent good value.” together in some way.” they would go for a another telecoms business, The caveat is that if SoftBank becomes as big but if they try to do that now before they have The SoftBank network as its ambitions suggest, will it still be able to definitively turned the corner with Sprint, we Much of this value creation comes with the bring all of its operational expertise to bear? Not think they would get punished for it,” says synergies that SoftBank is able to find with everybody thinks scale will be an issue – least of Juggins. “They would be biting off more than existing portfolio companies. According to CSLA’s all Son himself. He tends to target fast-growing they can chew.”

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How much does it cost? That depends on how much access you want, but we can customise cost-e ective packages to all rms, regard- less of size. For more information, contact Sally Yip at +(852) 3411 4921 or email [email protected] and we will be happy to discuss with you. Asian Venture Capital Journal FOCUS [email protected] avcj.com site licences An end to uncertainty? China has proposed a new set of rules that would regulate the use of variable interest entity (VIE) structures that underpin VC investment in restricted industries. It is a positive sign but questions remain

VARIABLE INTEREST ENTITY (VIE) investment enterprises (FIE), equity joint ventures actual control over their businesses in China,” says structures are a feature of many of the 132 and contractual joint ventures. Officials will Rocky Lee, Asia managing partner at Cadwalader. VC-backed Chinese companies that have gone assess whether ultimate control of a VIE lies “I don’t think the new rules will really hurt the public in the US since 2000. Originally devised with Chinese nationals or foreign investors. If market because most VCs take a minority stake to work around restrictions on partial foreign the former, the company will be classified as in companies but it can hurt the VC investors ownership of assets held by internet portal Sina, a domestic business. If the latter, any existing from an exit perspective because arguably only a VIEs are widely-used yet clouded by uncertainty. restrictions on overseas participation in the target Chinese buyer can acquire the business.” The legal status of the structure – actually industry would void the investment. a series of contractual agreements – has never Most industry participants agree that VC- Risks remain been clear. It was feared that Chinese authorities backed companies are unlikely affected by The upshot of the draft law is that control of might cease turning a blind eye and ban VIEs, these changes – VIEs are usually controlled by China’s overseas-listed internet companies will wiping out billions in investments. Last week, Chinese nationals and most of the VCs come in remain in Chinese hands. Foreign investors though, the mists began to lift. The Ministry of as minority investors in start-ups. have control over existing VIE structures may be Commerce (MofCom) issued a draft rule that required to divest during the three-year period would legalize and regulate foreign investments following promulgation of the law. The investors Wider reach to everyone in your organisation using these structures. “MofCom will likely would then apply to MofCom for a license to “It is a great development,” says Ning participate in restricted industries and this might Zhang, senior counsel at O’Melveny & Myers grandfather in existing be conditional on business lines being sold off, (OMM). “Under the new rule, MofCom will likely VIEs and foreign limits to the scope of operations, or requirements avcj.com site licence allows everyone in your organisation to have instant access to in-depth analysis, grandfather in all existing VIEs and foreign for a minimum number of domestic employees. real-time news and information on private equity in Asia and beyond. Sign up for an avcj.com site investors may use a VIE structure controlled by a investors may use a VIE “The draft Foreign Investment Law has taken a Chinese national to invest in restricted businesses.” page from the Anti-Monopoly Law playbook and licence now and empower your team with critical information and data to soar above your He sees this as a stepping stone to wider structure controlled by proposes a similar approach in reviewing foreign competitors in Asian private equity: deregulation of the foreign investment a Chinese national to investment in restricted industries,” Morrison & catalogue. Overseas majority ownership was invest in restricted in Foerster’s Chou says. “PE investors will need to Access up-to-date news on Asia’s private equity market recently permitted in all facet s of e-commerce be prepared to re-assess the value drivers of and similar moves are expected in education and the investment if such conditions are imposed, industries” – Ning Zhang Track the latest trends in fund raising, investments, exits and capital under management healthcare. There will still be a need for VIEs but and have contractual mechanisms in place to Learn of new mergers, acquisitions and business alliances they are likely to be less complex. terminate the investment without penalty, if However, Thomas Chou, partner and co-head the conditions imposed render their original Undertake investment and risk assessment The status quo of Morrison & Foerster’s China PE practice, notes investment assumptions invalid.” Assess the e ects of global developments on a specic region or country Under the current rules, foreign investors cannot that the new rule could potentially give domestic The China Securities Regulatory Commission have full exposure to Chinese companies that management leverage to reduce the scope of (CSRC), which is in charge of onshore and Understand changes in the regulatory environment operate in “negative list” industries, such as the protective provisions offered to foreign VCs. offshore listings, will also be a key player in the Get business intelligence on major deals internet, education and telecom. The definition of “control” includes acquiring enforcement of the new regulations. It is unclear A VC invests in such companies via an offshore voting rights that can exert a material impact what the agency’s stance on VIEs might be, Swiftly and accurately identify potential business opportunities special vehicle, which holds onshore assets on corporate resolutions, or the ability to exert particularly given a number of Chinese firms in through a wholly foreign-owned enterprise decisive influence on the operations, finance, restricted industries have been delisting from US (WFOE). Restricted assets, such as a website personnel or technology of the business. bourses in past few years and may list onshore. How does it work? operating license, are held in a parallel structure “I am already visualizing negotiations in The CSRC also has the authority to regulate owned by one or more Chinese nationals, usually which the founders of a value-added telecoms overseas listing of China-based businesses using We will arrange online access for your employees to avcj.com, either with individual passwords or by general a company founder. A VIE secures the WFOE’s company argue that such limits on protective VIEs and other offshore structures although it has interest in the parallel structure. provisions are not only necessary for operational not exercised that power since 2003. access through IP address recognition. The problem to date has been MofCom’s efficiency, but also in order to comply with “If an offshore entity using a VIE structure refusal to officially acknowledge this aspect foreign investment restrictions,” Chou says. wants to list onshore, it should follow regulations of foreign investment. “Its position has always In the meantime, there may also be issued by the CSRC, but the CSRC has yet to issue How much does it cost? been, ‘I know this structure but I don’t like it. I consequences for multinational companies that regulations,” says OMM’s Zhang. “It would also won’t recognize it and you shouldn’t push me, invest in restricted industries. be interesting to see how the draft law impacts That depends on how much access you want, but we can customise cost-e ective packages to all rms, regard- otherwise I would say it is illegal,” one lawyer says. “Multinationals that use a VIE structure stand China’s existing cross-border M&A regulations The draft Foreign Investment Law will to lose because they would likely not be able to and the CSRC’s attitude towards overseas listings less of size. For more information, contact Sally Yip at +(852) 3411 4921 or email consolidate three existing laws on foreign show that Chinese individuals or entities have of China businesses using offshore structures.” [email protected] and we will be happy to discuss with you.

Number 04 | Volume 28 | January 27 2015 | avcj.com 11 DEAL OF THE WEEK [email protected] Goldman backs Antuit’s big data ambitions

VARIOUS FACTORS INFLUENCE THE Antuit now has offices in Bangalore, Auckland, Antuit, which provides analytics that enable amount of milk a cow produces – breed, diet, New York and Seattle as well as Singapore. Last companies to assess their supply chain and weather, living conditions and the calving cycle week Goldman Sachs led a $56 million round of operations and sales and marketing, serves a among them. Working with one of its clients, funding – in which Zodius also participated – combination of Fortune Global 500 and young, dairy giant Fonterra, Singapore-headquartered that will be used to drive an aggressive growth high-growth clients. In many cases these are big data analytics firm Antuit now collects all strategy. “If we are not one of the leaders in the companies that are coming up with analytics in this information and predicts herd output on a next 3-5 years then we would be house or relying on a third-party per-cow basis. disappointed,” Sengupta adds.” provider and they are unhappy “The way you manage data and what you can Estimated to be worth $10 with their current level of service. do with it has just changed dramatically,” says billion and growing rapidly, the Antuit rebuilds the raw Arijit Sengupta, Antuit’s CEO. “People weren’t global big data services market is data – cleaning it and tagging it even thinking about these kinds of models and expected to go through a period properly – and then creates sets solutions 3-4 years ago, but more of it is going to of consolidation, although the of visualizations that, for example, happen.” timeline for this is unclear. track market share movements or Sengupta, formerly an executive at IBM and Sengupta accepts there will Antuit: Data download inventory costs. These form the Accenture, set up Antuit in March 2013. Zodius be a few leaders with significant basis for modeling solutions for Capital provided $3 million in seed funding to get scale, a weaker middle, and a long tail – destined particular supply chain and marketing problems. the business started and support the acquisition to get shorter given the sheer number of start- As the company expands it may add capabilities of Marketwell, providing a readymade footprint ups entering the big data analytics space. At the in other areas, such as education or HR analytics, in the US. “We saw the play to become one of the same time, he distinguishes this segment from IT but for now the focus is on staying ahead of the leaders in this market if we put together the right services and business process outsourcing in that curve in core business areas. value proposition and do organic and inorganic models are still evolving and there is demand “We have to be very paranoid about being up growth and get the right team and capabilities,” for specialist capabilities that might come from to date because this industry is moving very fast,” says Sengupta. smaller players. Sengupta says. Meituan enters the big league

ASKED WHETHER, TWO YEARS AGO, HE for the fervor to die down. The Series B came by Alibaba’s C2C platform Taobao Marketplace. could have envisaged Chinese group-buying site when the segment was awash with competitors, “Selling services is very different from selling Meituan achieving a $7 billion valuation Feng and a couple of months after market leader food or cosmetics,” Deng says. “The online-to- Deng, founding managing director of Northern Lashou took its funding to $166 million within 12 offline (O2O) element is important so you need Light Venture Capital, gives a swift no. months. Deng claims that even then there were a strong local offline team. You need to have Bearing in mind the company’s subsequent signs the music was slowing down. relationships with individual vendors.” growth and the current climate in the tech space, “Meituan wasn’t number one; Lashou was WoWo, which started out as the operator however, a $700 million round at a $7 billion on top and WoWo was arguably stronger than of consumer services-oriented group-buying valuation doesn’t seem so surprising. Valuations Meituan in many metrics,” he says. business 55tuan, turned itself into might be spiraling out of control in the sector as “We invested in Meituan was a marketplace. Meituan’s closest a whole, but he believes that certain investors are because we liked the founder. He independent competitor is now justified in their willingness to pay a premium for is strong, experienced, clear in his Dianping, followed by Nuomi. clear market leaders. strategy, and he has a good team With Alibaba backing As an early-stage player, Northern Light has around him.” Meituan, Tencent Holdings sat out Meituan’s last two rounds: a $300 million Deng credits Meituan’s taking a 20% stake in Dianping commitment at a valuation of $4 billion in May founder, Xing Wang, with last year, and Baidu acquiring 2014, led by General Atlantic and with Sequoia exercising discipline when others Meituan: Strength in numbers Nuomi in 2013, group buying Capital and Alibaba Group also participating; and in the industry were losing their appears to gripped by the the recent $700 million investment from a group heads. The other differentiating factor was the strategic standoff present in other segments of of undisclosed backers. company’s focus on local services – consumer- the internet industry. “The giants will come into The firm took part in a $50 million Series B related offers on hotels, restaurants, cinema any hot vertical and pick sides,” says Deng. “This in 2011 alongside Sequoia, Alibaba and Walden tickets, and so on – rather than consumer goods. is important to smaller companies. When you International. It started looking at group buying Lashou concentrated aggressively on the latter, see a competitor get investment from a strategic opportunities a year earlier but decided to wait as does Juhuasuan, a group buying site launched player you feel you need to do the same thing.”

12 avcj.com | January 27 2015 | Volume 28 | Number 04 DEAL OF THE WEEK / FUNDS [email protected] ClearVue’s cross-border cosmetic play

BEAUTY IS A BIG BUSINESS FOR CLEARVUE headquartered company abandoned plans to list Chinese brands develop local products. Partners. Sales of cosmetic products in China on the Milan bourse due to adverse conditions At present the China contribution to overall grew 10% year-on-year between 2008 and 2013. and high volatility. Hui says the firm now plans to group revenue is small, but ClearVue will use The market is thought to be worth $80 billion concentrate on growing its business with a view its network to help Intercos forge partnerships with plenty of room for further growth. to reactivating the IPO plan in a with local cosmetic and skincare “We adopt a research-driven approach to find few years. China is a key target brands. The market is highly leading companies in three pillars – food and market and ClearVue will serve as fragments, with the largest beverage, lifestyle and consumer technology,” Intercos’ local partner, driving the players having no more than a says Harry Hui, managing partner at ClearVue. expansion initiative. 5% share, which makes it difficult “Cosmetics and skincare sector has a great upside Intercos is described as the for outsiders to penetrate. given Chinese consumers are becoming more world’s leading original design “We can help local brands selective in choosing beauty products that could manufacturer (ODM) and original develop different product lines to meet international safety standards.” equipment manufacturer (OEM) All made up: Clearview sell either in personal health and The GP completed its first deal in the for international cosmetics beauty stores or convenience space in 2012, leading a $20 million Series B brands. It produces eye shadows and lipsticks stores. Those companies will invest large round for Chinese nutritional beauty products throughout the value chain, from mass market to amounts in promoting their new products, which manufacturer Lumi. A second deal came last high-end segments. will drive Intercos’ inventory supply.” week with an undisclosed commitment to The company has over 2,800 employees, Intercos also plans to supply e-commerce Europe-based Intercos. This is also the third cross- seven research centers, 12 production sites and operators. Sales of cosmetic products through border transaction from ClearVue’s debut fund, 11 marketing offices across four continents. In online channels account for less than 1% of total which closed at $262 million in early 2014 China, it already has a production site in Suzhou. sales, but Hui thinks this share could expand to The Intercos round was led by Catterton, This base will not only be used to manufacture 15%. “In today’s market, many cosmetic vertical a US-based PE firm that also focuses on the cosmetic products for international brands e-commerce platforms have developed their consumer space. Three months earlier, the Italy- exporting into the US and Europe, but also help own brands.” China’s Banyan fast-tracks Fund II

THE LAUNCH OF BANYAN CAPITAL’S founders of companies the team backed while at Gao expects frothy valuations in the tech second US dollar-denominated fund came IDG. A substantial portion of the commitments space to normalize in 2015. At the same time, sooner than expected. The China-focused VC to Fund II come from institutional investors backing more early growth-stage companies firm, which spun out from IDG Capital Partners including sovereign wealth funds, endowments, mitigates investment risk. “For internet and closed its debut vehicle at $206 million just and family offices. However, many of the high net businesses, especially O2O players, the amount of over 12 months ago, had the Fund II launch worth individuals from the first capital raised is a key to whether penciled in for the second quarter of 2015. fund re-upped for its successor. or not they are successful,” he This plan changed when sit-downs with a Over half the Fund I corpus says. “If a company gets a lot of handful of international LPs – in Asia for annual has been deployed in more than VC funding it can expand into general meetings of other GPs – crystalized 20 companies, mostly in Series more cities and achieve a larger into prospective commitments. “Few people A rounds. Deals include leading market share.” expected us to close our debut fund in just three a $35 million round for Huami, A number of new Chinese months, and they appreciated that we could a fitness wearables start-up VC funds have been set up invest in some good companies,” says Xiang Gao, launched by smart phone maker Banyan: Growing opportunity since Banyan was founded. This, co-founder of Banyan. Xiaomi and teaming up with combined with the emergence In response to this interest, Gao and his two Tencent Holdings to invest in express delivery of angel investors, has added to the volume of co-founders Zhen Zhang and Bin Yue decided mobile app Renrenkuaidi. backers for start-ups, and contributed to rising to begin fundraising in the fourth quarter of Series A rounds will remain the primary focus valuations. Nevertheless, Gao says the industry is 2014. Last week Banyan Partners Fund II closed of Fund II, but the firm plans on participating in not as competitive as some might think. at $362 million. The vehicle was substantially more Series B investments. Vertical e-commerce “Competitiveness depends on fund size and oversubscribed with demand reaching $500 platforms, mobile internet, intelligent hardware, mainstream VC firms still dominate the market,” million and re-ups from most existing LPs. and online to offline (O2O) businesses – notably he says. “The size of our first fund limited our Fund I relied heavily on LP contributions in the financial services, healthcare, education opportunities to invest in good projects. With from high net worth individuals, including the and real estate sectors – are priority targets. Fund II we can develop our strategy.”

Number 04 | Volume 28 | January 27 2015 | avcj.com 13 4th Annual Private Equity & Venture Forum Indonesia 2015 24 March, Grand Hyatt Jakarta

GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY avcjindonesia.com CHANCELAST Volatility, Opportunities and Jokonomics: TO (Book US$200by 6 FEBRUARY) A new landscape for PE SAVE We are delighted to bring your attention to the NEW speakers already confirmed for the 4th Annual AVCJ Indonesia Forum. Taking place on 24 March 2015 in Jakarta, this year’s agenda will adopt a lively and interactive format, addressing the significant potential as well as challenges PE is facing in this unique but volatile market. Join local and regional private equity leaders to debate whether Indonesia is still THE hot market in Southeast Asia and how deal activity can be increased over the next 12 months.

NEW speakers just confirmed include: Sandeep Naik Anne Kim Managing Director, India & Investment Director Southeast Asia HERITAS CAPITAL MANAGEMENT GENERAL ATLANTIC

Azam Khan Harold Tjiptadjaja Chief Investment Officer, Managing Director, Chief Investment Infrastructure East Asia and Pacific Officer – Domestic Client IFC IFF

Irene Koh Jaka Prasetya Vice President Managing Director, Private Equity JP MORGAN ASSET MANAGEMENT KKR SINGAPORE

Jean-Christophe Marti Scott Younger Senior Partner Director NAVIS CAPITAL PT NUSANTARA INFRASTRUCTURE

Edwin Syahruzad Director PT SARANA MULTI INFRASTRUKTUR For the latest programme and speaker (PERSERO) line-up, visit avcjindonesia.com HOW TO REGISTER – BOOK BY 6 FEBRUARY TO SAVE US$200 Registration: Yeni Kittrell T: +852 3411 4836 E: [email protected] Sponsorship: Anil Nathani T: +852 3411 4938 E: [email protected] Enquiry

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Scan this QR code with Join your peers your phone to access the avcjindonesia.com #avcjindonesia event website 4th Annual Private Equity & Venture Forum LP INTERVIEW Indonesia 2015 [email protected] 24 March, Grand Hyatt Jakarta Alibaba exposure The Teachers’ Retirement System of the State of Illinois hit rich with its first co-investment in the region – Alibaba Group. It is looking for more direct exposure globally and expects to be increasingly active in Asia

FOR A FIRST ASIAN CO-INVESTMENT, a return of 25.6%, 18.2% and 15.3% on a one, five Creek, which is now fully invested. More recently, Alibaba Group is not a bad choice. The Teachers’ and 10-year basis, compared to 18.1%, 13.9% TRS Illinois has agreed a separate managed Retirement System of the State of Illinois (TRS and 7.8% for the portfolio as a whole. Last year account with Asia Alternatives worth $200 GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY avcjindonesia.com Illinois) committed $40 million to the Chinese the private equity allocation was increased from million. e-commerce giant in 2012, having been brought 12% to 14%. The system has 15% of its assets in “Half of it is geared towards fund investments CHANCELAST into the deal by portfolio GP Silver Lake, which real estate and 8% in hedge funds. There are no where they have discretion. We have discretion TO Volatility, Opportunities and Jokonomics: ( committed $500 million across two rounds in investments in infrastructure. over the other half and we are drilling down into Book US$200by 6 FEBRUARY)SAVE 2011 and 2012. The private equity team has doubled in size opportunities we think will be alpha-generating A new landscape for PE Alibaba’s approximate valuation during this to four members – a response to the larger – direct co-investments into portfolio companies We are delighted to bring your attention to the NEW speakers already confirmed for the period was $35-40 billion. It shot up to around allocation and also the appetite for direct and commitments to funds,” Matheny says. “It is 4th Annual AVCJ Indonesia Forum. $168 billion based on the September 2014 exposure. The co-investment program started a good way to create a partnership where you IPO price and now stands at $242 billion. This four years ago and 15 deals, worth about $500 pay to leverage their expertise and also further Taking place on 24 March 2015 in Jakarta, this year’s agenda will adopt a lively and interactive suggests that TRS Illinois has made a more than million, have been completed. TRS Illinois wants educate yourself by spending time with them on format, addressing the significant potential as well as challenges PE is facing in this unique but six-fold paper gain on its original investment. co-investment as a proportion of the private the ground.” volatile market. Join local and regional private equity leaders to debate whether Indonesia is still “We were critical,” Kenyatta K. Matheny, a THE hot market in Southeast Asia and how deal activity can be increased over the next 12 months. senior investment officer with the pension system, says of the due diligence process. “We TRS Illinois’ direct GP relationships in Asia NEW speakers just confirmed include: wanted to know what the exit strategy was, how Investment (US$m) Fund size (US$m) quickly the business could be scaled up, and Sandeep Naik Anne Kim 2010 Baring Asia Private Equity Fund V 100 2,460 whether the market was sustainable given the Managing Director, India & Investment Director 2011 Trustbridge Partners IV 30 528 given the growth the asset had already achieved. Southeast Asia HERITAS CAPITAL MANAGEMENT The reality is it has worked out really well and the 2012 MBK Partners III 125 2,700 GENERAL ATLANTIC scale of the business is phenomenal.” 2014 Baring Asia Private Equity Fund VI 100 3,850* Azam Khan Harold Tjiptadjaja TRS Illinois is keen for more co-investment Source: TRS Illinois * Projection Chief Investment Officer, Managing Director, Chief Investment opportunities in Asia, but not solely because Infrastructure East Asia and Pacific Officer – Domestic Client of Alibaba. Exposure to the region is growing equity portfolio to increase from the current 10% With investment officers making just four IFC IFF and co-investment is a key tenet of the system’s to around 20% over time. trips to Asia each year, TRS Illinois recognizes it overall PE strategy. Ticket sizes for individual funds fall in the $75- needs help to keep track of what is going on in Irene Koh Jaka Prasetya “It is increasingly part of the discussion with 100 million range, with a ceiling of $250 million the region. Asia Alternatives also offers access to Vice President Managing Director, Private Equity GPs, particularly for managers to whom we are for situations in which the system is an anchor mid-market and lower mid-market GPs that are JP MORGAN ASSET MANAGEMENT KKR SINGAPORE making a second or third commitment,” Matheny investor in a vehicle. The smallest commitments too small to receive a direct allocation but may explains. “Our co-investments tend to be with to PE funds have been $20-50 million and then become candidates if they are successful and GPs we’ve got to know. We’ve seen the capital $15-20 million in the VC space where allocations scale up fund sizes. Jean-Christophe Marti Scott Younger calls come through, we’ve spoken to them and are limited. Matheny sees this kind of relationship as Senior Partner Director we’ve seen them execute their strategy.” TRS Illinois currently has three direct GP essential to US public pension funds that have NAVIS CAPITAL PT NUSANTARA INFRASTRUCTURE relationships in Asia. It committed $100 million no realistic ambitions of setting up offices in the A growing appetite Baring Private Equity Asia’s sixth pan-regional region. The size of the commitment may wane TRS Illinois had total assets of $45.4 billion as fund, which is expected close at the hard cap over time as TRS Illinois become more familiar Edwin Syahruzad of June 2014 and an unfunded liability of $61.6 of $3.85 billion. The system invested the same with the market but he sees this as being “at least Director billion. The private equity program had delivered amount in Baring Asia’s previous vehicle. There 10 years out if not longer.” PT SARANA MULTI INFRASTRUKTUR For the latest programme and speaker was also a $125 million allocation to MBK In the meantime, the pension system’s (PERSERO) line-up, visit avcjindonesia.com Partners third North Asia buyout fund – plus exposure to Asia – currently 8%, although the “Having a balanced a co-investment in ING Korea Life – while figure is deceptive due to the size of the Alibaba China-specific exposure comes via a $30 million interest – is likely to increase. “I think the US is HOW TO REGISTER – BOOK BY 6 FEBRUARY TO SAVE US$200 portfolio is going to be commitment to Trustbridge Partners IV. going to move to a more stressed environment, given where valuations and debt multiples are Registration: Yeni Kittrell T: +852 3411 4836 E: [email protected] key and a lot of growth Feet on the ground now, and then Europe is already stressed with Sponsorship: Anil Nathani T: +852 3411 4938 E: [email protected] Enquiry will come from this In 2010, as part of the pension system’s efforts pockets of assets at a distressed level,” Matheny to test out the Asian market, there was also a says. “Having a balanced global portfolio is going Legal Sponsor part of the world” $100 million investment in a regional co-mingled to be key and a lot of growth will come from this fund-of-funds product launched by Morgan part of the world.” Scan this QR code with Join your peers your phone to access the event website avcjindonesia.com #avcjindonesia Number 04 | Volume 28 | January 27 2015 | avcj.com 15 Customized Research Report Asian Private Equity Data Made Simple

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