Editor’s take: The week that was — Oct 3-8

Editor’s take: The week that was — Oct 3-8

After hosting the annual Asia PE-VC Summit in Singapore on Sept 27-28, the DealStreetAsia team slid back into our normal routine this week, but with an added dose of stories from our flagship event.

Read the reports from the summit here for the latest insights on the line between PEs and VCs blurring, investing in climate tech, GoTo’s path to profitability, and more.

In conjunction with the summit, we also released the ‘Private Equity in SE Asia: Fundraising Landscape 2022’ report. Adverse economic conditions have led to a slowdown in fundraising, and consequently, only two Southeast Asia-focused PE funds reached a final close this year, the report said.

The other big stories

Several startups in the region are reporting ballooning losses even as investors are looking for companies with a proven path to profitability.

This week, we reported based on ACRA data that losses at Alibaba-owned e-commerce company Lazada South East Asia Pte. Ltd. shot up 4.5x to $863.7 million in the year ended March 2021. The firm’s revenue also fell 65% year-on-year to $556,000 from $1.6 million the year before. The financials do not include Lazada’s Indonesia business.

At Malaysian used car marketplace and unicorn Carsome, rising losses led to staff retrenchment last month. For its part, the company says a leaner organisation will lead to greater efficiencies, which will help it double revenues this year and achieve profitability by Q3 next year. “We are already halfway there based on the first half numbers, so we are quite confident that we can achieve that and possibly, more,” Carsome CEO Eric Cheng told DealStreetAsia this week.

Indonesian digital payments unicorn Xendit, too, is laying off 5% of its staff in Indonesia and the Philippines, citing “uncertain macroeconomic conditions”.

Investors, meanwhile, seem to believe the worst is yet to come. “Current valuations are not reflecting the risk of the downturn we see in the next 12-18 months,” said Temasek’s chief investment officer Rohit Sipahimalani. The state investor is waiting for further declines in startup valuations before stepping up investments.

A dose of PE news

US private equity major Warburg Pincus sees sizeable opportunities in Southeast Asia as it looks to replicate its success in markets such as China and India, said CEO Chip Kaye and Jeffrey Perlman, managing director and head of Southeast Asia, in an interview.

London-listed Intermediate Capital Group’s (ICG) flexible capital-structuring solutions have thrown up more investment opportunities, Escamillo Lin, the firm’s head of Southeast Asia for the structured and private equity and private debt business, said in a recent interaction.

Swiss private markets firm Partners Group is set to focus on the B2B technology segment in Southeast Asia over the next few years, even though there are currently few buyout opportunities in this space, said private equity technology MD Cyrus Driver.

Singapore-based Pierfront Capital has also closed a $700 million second credit fund. The capital raised includes $450 million of investor commitments and co-investment commitments.

TPG Rise, the global impact investing platform of private equity giant TPG Inc, anchored a $450-million Series E financing in Form Energy, an American energy storage company.

India-focused fund manager Motilal Oswal Alternates has made the final close of its fourth private equity fund at Rs4,500 crore ($550.3 million) as it gears up to ramp up investments in mid-market companies across India.

Deals & IPOs

I’ll start with a deal that did not happen.

Dutch technology investor Prosus said this week that its high-profile $4.7-billion deal to buy Indian payments platform BillDesk has been terminated, adding that conditions had not been met. Fintech valuations have fallen sharply since Prosus announced plans to buy BillDesk in August 2021 to strengthen its presence in India, one of its largest markets.

Onto the deals that happened:

Singapore-based cashback platform ShopBack has raised an additional $80 million in equity funding in a Series F extension from 65 Equity Partners, a wholly-owned subsidiary of state investor Temasek Holdings.

Southeast Asian fintech company Atome Financial, which operates the BNPL platform Atome and the Indonesian digital lending player Kredit Pintar, is raising $25 million from its parent company Advance Intelligence Group (Advance.AI), show regulatory filings.

In IPO news this week, PT Global Digital Niaga, the parent company of Indonesian e-commerce firm Blibli and online travel agency Tiket.com, is planning an IPO on the local bourse targeting a valuation of 33.4-42.4 trillion rupiah ($2.21-2.79 billion).

Creador-backed Malaysian bubble tea chain Loob Holding is also revisiting IPO plans.

Thai food company Betagro Pcl said that it plans to raise at least 17.4 billion baht ($463.38 million) in an IPO later this month. The listing would be Thailand’s second-largest offering this year after Thai Life Insurance Pcl raised nearly $1 billion in July.

And finally…

And lastly, some news, albeit stark, from the crypto world. A blockchain linked to Binance, the world’s largest crypto exchange, has been hit by a $570 million hack.

Blockchain bridges have increasingly become the target of thefts, which have long plagued the crypto sector. Some $2 billion worth of cryptocurrency has been stolen in 13 different bridge hacks, mostly this year, show data from crypto analytics firm Chainalysis.

Now that we are on the topic of cyber security, protecting data and ensuring privacy, too, is increasingly being seen as important. Australia, for instance, has unveiled new privacy rules after a recent data breach at telecommunication firm Optus, which is owned by Singapore’s Singtel.

Indonesia, too, has a new data protection law, but will it suffice to force organisations to improve their data handling and security systems? I’ll leave it to you to decide.

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