Southern Capital raises $400m for Southeast Asia fund

Marketing for the new fund began in mid-2012 with a hard cap of $350 million. However, due to strong demand from LPs - investors were willing to put in as much as $600 million - it was agreed to raise the ceiling to $400 million, according to sources familiar with the situation.

The level of demand is further evidence of LP interest in Southeast Asia as appetite for PE exposure in China and India wavers. According to AVCJ Research, commitments to Southeast Asia-focused funds reached $4 billion in 2012, the most in four years, although this doesn't reflect capital accumulated by pan-regional funds - many of which are staffing up in Southeast Asia - and single country vehicles.

Funds with a similar geographic mandate to Southern Capital Fund III include Credence Fund II, which reached a final close of S$200 million ($159 million) in February, while KV Asia Capital Fund announced a first close of $100 million last October and is targeting $250 million. In each case, the strategy differs somewhat from SCG.

The private equity firm's first institutional fund, Mulberry Asia Fund I, attracted commitments of $55 million in 2005 and pursued control deals throughout the region. Four years later, it reached a final close of $300 million on Mulberry Asia Fund II, which followed the same remit as its predecessor.

SCG, which has offices in Singapore and Kuala Lumpur, typically invests in high-growth middle-market businesses with enterprise values of $20-200 million. Target sectors span financial services, manufacturing, business process outsourcing, consumer products and services, healthcare and selected infrastructure.

Past investments include Novomatrix, a manufacturer of protective films for windows. SCG bought the business in 2006, helped build revenues through a combination of operational improvements and upstream and downstream bolt-on acquisitions, and sold it to a US strategic buyer in 2010, generating a gross IRR of 59%.

Park Hill acted as placement agent for Southern Capital Fund III.

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• Topics
• Fundraising
• Southeast Asia
• Buyouts
• Southeast Asia
• buyout
• Malaysia
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• Fundraising