Singapore-Based Private Equity Fund Closes Its New Fund


August 28, 2015


Private equity firm Lion Global Investors announced on Thursday that it had closed its latest fund. The private equity firm formed the fund together with the Singapore-headquartered OCBC Bank and after a rocky start had to upsize it. The hope is to use the new fund for investments in small and medium-sized companies in Asia.


The Fund


The fund started fundraising in November last year. The fund didn’t start nearly as strongly as some expected, but the nine-month fundraising eventually ended up having the fund upsized. The fund closed with $393 million, which is around 40% more than the initial aim.


The Lion-OCBC Capital Asia Fund I is looking to invest in small and medium-sized companies in Singapore, Malaysia, Indonesia and China. The Singapore-headquartered bank is well placed to provide clientele for the fund, as it has a strong client base in the three core markets the fund is set to invest in.


Daniel Kwan, head of MCU at OCBC Bank, told International Advisor, “We introduced this fund to meet growing interest in alternative assets from our market partners and high net worth customers in Bank of Singapore”.


Strong Investor Base


The funds similar to this are typically closed within a year and the private equity firm can find positives from the strong investor sentiment. The investors in the fund come from a large pool of regional banks and high net worth individuals. Among the investors is OCBC Bank’s private banking subsidiary, Bank of Singapore.


“Investors in the fund were attracted by the superior returns that MCU has consistently delivered for OCBC of more than 20 per cent internal rate of return in the past six years as its private equity unit, as well as by the fund’s unique positioning as a bank-sponsored investment fund,” Mr Kwan said in the statement.


Looking for Core Markets


As mentioned above, the fund is hoping to invest in companies in Asian countries like China and Singapore. The Lion-OCBC Capital Asia Fund I also said it would focus on a few industries to make the most of the firm’s expertise in these industries. The industries are agriculture, commodities and the consumer industries, although it might invest to appropriate opportunities in other sectors as well.


The industries show the fund is hoping to tap into the urbanisation of the region. Big Asian countries have been driven by emergence of these new big cities and the increase in the group of middle-class earners to create a demanding market for new companies.


While fundraising efforts in Asia have been strong this year, the funds are taking their time deploying the capital. According to data by the Centre for Asia Private Equity Research showed the region’s fund had around $110 billion in dry powder at the end of last year.


Juan Delgado-Moreira, managing director for Hamilton Lane, told the Wall Street Journal in February that, “Fund managers across the region are being prudent and are not really finding a lot of opportunities or not having excessive confidence on what they are seeing”. It’ll be interesting to see how quickly Lion-OCBC Capital Fund I will deploy its capital.

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