Asia’s News Source avcj.com October 15 2013 Volume 26 Number 39

Editor’s Viewpoint Cast your vote in the 2013 AVCJ Asia Awards Page 3 News Carlyle, CIC, CITIC Capital, CPPIB, Fosun, GIC, Goldman, IFM, KKR, Matrix, MBK, Oaktree, RRJ, Sequoia, Sierra, StepStone, Tiger Global Page 4 Analysis Q3 analysis: Fundraising, and exits Page 10 Deal of the week Matrix backs hotel booking site Stayzilla Page 14 Profile Innovation Works’ Chris Asia’s liquid lenders Evdemon on getting into Chinese incubation Banks find their comfort zone financing offshore leveraged Page 6 Page 15

Focus Deal of the Week

Openings overseas Outsourcing again India makes it easier to do IPOs abroad Page 13 Apax adds GlobalLogic to tech portoflio Page 14 C: 100 M: 90.83 Y: 30.89 K: 26.87 C: 0 M: 0 Y: 0 K: 100

L Capital Asia 2 LP

held a first close at its hardcap of US$950,000,000

A private equity fund focussed on lifestyle consumption in emerging Asia

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August 2013 Editor’s Viewpoint [email protected]

Managing Editor Tim Burroughs (852) 3411 4909 Staff Writers Andrew Woodman (852) 3411 4852 Mirzaan Jamwal (852) 3411 4821 Voting opens for Winnie Liu (852) 3411 4907 Creative Director Dicky Tang Designers Catherine Chau, Edith Leung, the AVCJ Awards Mansfield Hor, Tony Chow Senior Research Manager Helen Lee Research Manager Alfred Lam Voting for the 2013 AVCJ Private • S.F. Express Group (CITIC Capital/Boyu Research Associates Equity & Awards opens Capital/Oriza Holdings/China Merchants Herbert Yum, Isas Chu, on October 16. The region’s private equity Group/China Development Bank) Jason Chong, Kaho Mak community has until October 29 to pay tribute Circulation Manager to the leading fundraises, , exits, EXIT OF THE YEAR Sally Yip Circulation Administrator individuals and firms of the past 12 months. • Bank Tabungan Pensiunan Nasional Prudence Lau Votes are cast via the AVCJ Awards website (Northstar Group/TPG Capital) Manager, Delegate Sales (www.avcjforum.com/awards), which also • China Pacific () Pauline Chen includes full details of the process, rules and past • Intelligence Holdings (KKR) Director, Business Development winners. No more than 10 votes will be accepted • Komeda’s Coffee (Advantage Partners) Darryl Mag from the employees of a single firm. The public • Matahari Department Store (CVC Capital Manager, Business Development has a 50% say in the final outcome, with a Partners) Anil Nathani, Samuel Lau judging panel of industry experts and the AVCJ Sales Coordinator Editorial Board each accounting for 25%. VENTURE CAPITAL PROFESSIONAL OF THE YEAR Debbie Koo Based in part on recommendations submitted • Edward Tian (CBC Capital) Conference Managers by the private equity community, the AVCJ • Richard Liu (Morningside Technologies) Jonathon Cohen, Sarah Doyle, Zachary Reff Editorial Board drew up nominee shortlists in • Ravi Adusumalli (SAIF India) Conference Administrator consultation with the judging panel. • Lei Jun (Shunwei Capital Partners) Amelie Poon Conference Coordinator • David Wei (Vision Knight Capital) Fiona Keung, Jovial Chung The nominees in each category are as follows: Publishing Director PRIVATE EQUITY PROFESSIONAL OF THE YEAR Allen Lee FUNDRAISING OF THE YEAR • Jiao Zhen (CDH Investments) Managing Director • FountainVest China Growth Fund II • Sigit Prasetya (CVC Capital Partners) Jonathon Whiteley (FountainVest Partners) • Joseph Bae (KKR) • KKR Asian Fund II (KKR) • Michael B. Kim (MBK Partners) • L Capital Asia II (L Capital Asia) • Richard Ong (RRJ Capital) • MBK Partners III (MBK Partners) • Southern Capital Fund III (Southern Capital FIRM OF THE YEAR Incisive Media Group) • Baring Private Equity Asia Unit 1401 Devon House, Taikoo Place • CDH Investments 979 ’s Road, Quarry Bay, VENTURE CAPITAL DEAL OF THE YEAR • KKR T. (852) 3411-4900 • 360Buy (Kingdom Holding/Ontario Teachers’ • MBK Partners F. (852) 3411-4999 E. [email protected] Pension Plan/Tiger Global) • Quadrant Private Equity URL. avcj.com • App Annie (BV Capital/Sequoia Capital/ Beijing Representative Office Infinity Fund Management/IDG Capital Winners in the above categories – plus the No.1-2-(2)-B-A554, 1st Building, No.66 Nanshatan, Partners/ Partners) recipients of the Operational Value Add Award Chaoyang District, Beijing, • Flipkart Online Services (Naspers/Tiger and the AVCJ Special Achievement Award – will People’s Republic of China T. (86) 10 5869 6203 Global/Accel Partners/Iconiq Capital) be announced at an invitation-only gala dinner in F. (86) 10 5869 6205 • Tujia (CDH Investments/Qiming Venture Hong Kong on November 11, preceding the AVCJ E. [email protected] Partners/GGV Capital/Lightspeed China/ Forum, which runs from November 12-14. Ctrip/HomeAway) A roundup of the evening will appear in • YouXinPai (Legend Capital/Bertelsmann that week’s issue of the Asian Venture Capital The Publisher reserves all rights herein. Reproduction in whole or in part is permitted only with the written consent of Asia/DCM/Tencent Collaboration Fund) Journal, released on November 13, and there will AVCJ Group Limited. be in-depth coverage of all the winners in the ISSN 1817-1648 Copyright © 2013 PRIVATE EQUITY DEAL OF THE YEAR December 3 issue of the magazine. • ING Life Insurance Korea (MBK Partners) • Inghams Enterprises (TPG Capital) Tim Burroughs • Loen Entertainment (Affinity Equity Partners) Managing Editor • Panasonic Healthcare (KKR) Asian Venture Capital Journal

Number 39 | Volume 26 | October 15 2013 | avcj.com 3 News

GLOBAL MBK closes third role. El-Ansary is currently a senior executive at fund at $2.7b hard cap the Institute of Chartered Accountants Australia. StepStone completes MBK Partners has closed its third fund at the hard cap of $2.7 billion after just over one year in the GREATER CHINA Greenpark deal market. The North Asia-focused GP, which was StepStone Group has merged with secondaries founded by Michael B. Kim, former president of Alibaba will not pursue specialist Greenpark Capital. The transaction has Carlyle Asia Partners, set an initial target of around been confirmed, but a spokesperson declined to $2.25 billion for the fund. Hong Kong listing give more information on how it was structured, MBK Partners III reached a first close of $1.25 Alibaba Group has decided not to pursue a Hong citing confidentiality requirements. Greenpark’s billion last November, buoyed by re-ups from Kong IPO after efforts to persuade the exchange existing activities will now be conducted under the likes of Ontario Teachers’ Pension Plan and to accommodate a shareholding structure that the name StepStone International. Canada Pension Plan Investment Board. Other allows management to retain control of the LPs include Illinois Teachers’ Retirement System business met with a lukewarm response. It is Sovereign assets pass $5t, and Korea’s National Pension Service (NPS). The unclear where the listing – which could reach Seoul-based GP raised $1.6 billion for its second $15 billion – will now take place, although a US Asia sees fastest growth fund in 2009. Its debut vehicle, which raised $1.56 bourse is widely expected. Asia-based sovereign funds have seen their increase 19% since CITIC Capital, Crestview 2012, faster than any other region. Sovereign funds globally had an estimated collective AUM buy Stackpole of $5.38 trillion as of October this year, up from CITIC Capital Partners has teamed up with New $4.62 trillion in 2012, according to Preqin. York-based Crestview Partners to buy Stackpole International, a North American machinery supplier, from Sterling Group and Current Capital. AUSTRALASIA The transaction value was not disclosed but it is reportedly $512 million including debt. OzForex shares jump on debut following $416m IPO CIC, RRJ back SIIC OzForex Group - an Australian online foreign billion three years earlier, was at the time Asia’s Environment exchange services provider backed by The Carlyle largest-ever first time fund. Singapore-listed Chinese water treatment firm Group, Accel Partners and Macquarie Group - Investment from the new vehicle is already SIIC Environment will raise a total of S$260.2 saw its shares jump nearly 30% on its first day of well underway, with MBK responsible for three million ($209 million) by selling new shares trading following a A$440 million ($416 million) buyouts so far this year: Japanese coffee shop to investors including China Investment IPO. The offerings- Australia’s largest of the year - chain Komeda; Korean clothing retailer NEPA; Corporation (CIC), RRJ Capital and CCBI represented a full exit for the PE investors. and a $1.65 billion carve-out of ING’s Korea life International. SIIC, a subsidiary of Hong Kong- insurance business. listed Industrial Holdings, is selling 3.1 Australia’s IFM consolidates billion ordinary shares at S$0.085 apiece. private markets platform CPA rejects $2.6b takeover Goldman raises $315m in Industry Funds Management (IFM) has merged bid from CPPIB, Dexus its private equity and private assets groups into Geely Auto sell down one team, creating a new investment platform to The Commonwealth Property Office Fund (CPA) Principal Investment Area, an be headed by current head of the private assets has rejected a A$2.7 billion ($2.6 billion) takeover investment unit of Goldman Sachs, sold-down division, Phillip Bower. The group will incorporate bid from the Canada Pension Plan Investment its entire stake in Hong Kong-listed Geely IFM’s fund investments, co-investments, direct Board (CPPIB) and Dexus Property Group (DXS) Automobile Holdings, raising up to HK$2.44 investments, and long term assets operations. to acquire the trust’s Australian office portfolio. billion ($315 million). This follows partial exit last Commonwealth Managed Investments said year worth $254 million. Goldman held 8.05% of Matrix, Valara invest the proposal didn’t provide a compelling value Geely as of June. $150m in Xero proposition to unitholders. Fosun invests in Goldpoly New Zealand-based online accounting software AVCAL names Yasser El- company Xero has raised NZ$180 million ($150 New Energy million) from existing backers Matrix Capital Ansary as CEO Fosun Group has invested in Goldpoly New Management and Valara Ventures. Matrix and The Australian Private Equity and Venture Capital Energy Holdings, a Hong Kong-listed Chinese Valara - which is backed by Peter Thiel, an early Association (AVCAL) has chosen Yasser El-Ansary solar power station operator, by subscribing to investor in PayPal and Facebook - previously as its new CEO, effective from November 20. The a $50 million convertible bonds offering. China committed NZ$60 million to the company in appointment follows last month’s resignation of Orient Asset Management and US-based York November last year. Katherine Woodthorpe after seven years in the Capital were also among investors.

4 avcj.com | October 15 2013 | Volume 26 | Number 39 News

Sierra Ventures leads Series KKR invests $200m in for segments including osteoarthritis, anti- C round for Social Touch Weststar Aviation coagulants, gynecology, and ophthalmology. Chinese social marketing services provider Social KKR has completed its first investment in Sequoia commits $4m to Touch has raised $10 million in Series C funding Malaysia, paying approximately MYR642 million from a group of investors led by Sierra Ventures. ($200 million) for a substantial minority stake in India’s Idea Device Legend Capital and GGV Capital, which backed Weststar Aviation Services (WAS). It is also the Data center automation company Idea Device the company in its previous two rounds, also first investment from KKR Asian Fund II, a $6 has raised $4 million in Series A funding from participated. billion vehicle that reached a final close in July. Sequoia Capital. The company develops products The deal represents a proxy to the growth in in the enterprise IT automation space to reduce Shopping search portal Southeast Asia’s oil and gas sector. WAS provides operational errors and manual processes in data centers. It has offices in and Singapore B5M raises $16m round with a development center in Bangalore. ClearVue Partners has led a $16 million Series B round of investment in Chinese shopping portal B5M. The round also included Oak Investment SOUTHEAST ASIA Partners, the lead investor from an earlier $7.1 million Series A round, as well as existing GIC Private to anchor IFC investors and several new angel investors. Global Infrastructure Fund Singapore GIC Private NORTH ASIA helicopter transportation services to the likes of has become an anchor investor in IFC Global Petronas Carigali, Exxonmobil, Total, Talisman, Infrastructure Fund - a vehicle administered Mitsubishi sets up energy- Schlumberger, Shell and Conoco . by the fund management arm of International The company was founded in 2003, with a Finance Corporation (IFC), IFC Asset Management focused fund-of-funds fleet comprising a single helicopter, to supply Company (AMC) - which reached a final close Japan’s Mitsubishi Corp. has led the launch of a general aviation charter services. Five years of $1.2 billion. The vehicle received $200 million $300 million US energy-focused private equity later it entered the oil and gas space, securing a from IFC as well as commitments from nine other fund-of-funds. Energy Opportunity Fund is five-year contract to provide offshore transport sovereign and investors. expected to reach its target by September next services for Carigali Hess. Now WAS operates year. The fund will invest in North American funds eight helicopters and three private jets. CIC agrees debt-for-equity focusing on the broader energy sector, including WAS is one of eight divisions of Weststar shale gas, shale oil, refinement, transport, storage Group, a diversified regional operator with swap with Bumi Resources and power generation. businesses covering automotives, aviation, China Investment Corporation (CIC) has agreed construction, and defense and engineering. a debt-for-equity swap worth $1.3 billion with VC-backed Eneres in $25m embattled Indonesian miner Bumi Resources. CIC will receive a 42% shareholding in Bumi Japan IPO billion worth of stock in the IPO, with a minimum Resources Minerals plus 19% interests in three Eneres, a venture capital-backed energy public float of 25%. other subsidiaries. It will also be issued new resources management firm, saw its stock more shares in Bumi Resources worth $150 million. than double to JPY717 on its first day of trading India’s Flipkart raises in Tokyo following a JPY2.5 billion ($25 million) Oaktree agrees tanker deal IPO. The firm - which counts JAFCO and Daiwa additional $160m Corporate Investment (DCI) among its backers - Online retailer Flipkart has raised an additional with Singapore’s Navig8 sold 8.9 million shares priced at JPY280 apiece. $160 million in Series E funding from new Oaktree Capital Management and Singaporean investors Sofina, Morgan Stanley Investment shipping management firm Navig8 have Management, Dragoneer Investment Group and agreed to form a shipping joint venture, Navig8 SOUTH ASIA Vulcan Capital, along with participation from Chemical Tankers. The joint venture has already existing investor Tiger Global.It brings the total placed an initial order of six 37,000 deadweight Indian regulator revives raised in the Series E to $360 million. tonnage chemical tankers, plus a series of fixed REITs plan price optional vessels, for delivery in 2015. KKR to invest $150 million The Securities and Exchange Board of India (SEBI) DCP leads $20m Series B has issued draft guidelines to set up real estate Gland Pharma investment trusts (REITs) in the country, which KKR is reported to be in the process of buying for Amaranth Medical could help provide liquidity to existing investors around 30% of Gland Pharma, an active DCP Management led a $20 million Series B and attract more foreign capital. According to pharmaceutical ingredients and injectable drugs round for Amaranth Medical, a medical device the draft guidelines, only companies with assets manufacturer, for $150 million. Established manufacturer. Existing investors Bio*One Capital, worth at least INR10 billion ($162.8 million) can in 1978, Gland makes active pharmaceutical Charter Life Sciences and Phillip Capital, as well as list as a REIT, provided they sell at least INR2.5 ingredients and injectable formulations new entrant Venstar Capital, also participated.

Number 39 | Volume 26 | October 15 2013 | avcj.com 5 Cover Story [email protected] Familiar territory? Once regarded warily by banks due to the lack of security in providing offshore financing against onshore assets, Asia buyouts that rely on offshore holdco structures are increasingly sought after

The first flurry of private equity- filtering down into India, the other major Asian saw a 75% bump to $58.1 billion due to Chinese backed take-privates involving US-listed Chinese jurisdiction in which a soft scattering of buyouts offshore borrowing, with e-commerce giant companies closed in the autumn of 2011. has encroached upon the Alibaba Group raising $8 billion in the third There were four deals: Chemspec International, hegemony – and offshore holdcos are required quarter. Emerging Asia LBOs are a dot on this China Fire & Security, Funtalk China and Harbin to make deals work. landscape. As it stands, only 10 take-privates of Electric. In each case, a chairman who had grown “There is a lot more liquidity finding its way to US-listed Chinese companies have closed in the disenchanted with low valuations on US bourses Asia because it is chasing yield,” says Lyndon Hsu, last two years and few of those saw the arrangers sought an equity partner and a debt provider for head of Asia Pacific leveraged and acquisition do a full syndication into the market. a privatization. finance at HSBC. “In respect of LBOs, there are Terms also remain conservative. While The debt portion, where there was one, two more relevant phenomena. First, regional the increased willingness to finance these tended to be small and conservatively priced. and domestic banks have stepped up to fill the transactions is evidenced in rising gearing levels, Standard Chartered provided $70 million for gaps left by a lot of departing Western banks. they are nothing like what is seen in a US LBO. Chemspec while Bank of America, HSBC and Citi put up $60 million for China Fire & Security. Harbin Electric was the outlier, with China “In these LBOs you rarely have significant Development Bank (CDB) providing $400 million. Fast forward to the next batch of leveraged collateral. You are taking comfort from ongoing buyouts (LBOs) that began closing in early 2013 concern value of the business” – Rupert Manduke-Curtis and the picture is markedly different. 7Days Group received a $120 million facility from Nomura plus Taiwan lenders Cathay United Bank, Second, sponsors have recently been able to Leverage tends to be 3-4x versus 6x in the US and Chinatrust , Ta Chong Bank access the US capital markets because of the the equity portion of a deal is around 50%, well