Fund focus: Vertex strengthens its global foothold

When Israel opened up its tech sector to global private capital two decades ago - known as the Yozma program - Singapore's Vertex Ventures Holdings (VVH) was among the first Asian arrivals. A local firm, Vertex Venture Israel, was set up and went on to raised country-dedicated funds to support Israeli start-ups, receiving commitments not only from Vertex Ventures Holdings but also third-party investors.

After 18 years of operation, the Israeli firm's total assets have grown to approximately $650 million and its LP base includes groups from Asia, Europe and the North America.

VVH, a wholly-owned VC arm of Temasek Holdings, is now extending its global networks through a similar structure to the one that has worked in Israel. The holding company receives capital from its sole investor Temasek and in turn invests in funds raised by Vertex's family funds across South Asia, China, Israel and the US, alongside external LPs.

VVH's last two funds - each of which amounted to $250 million - largely focused on Asia. The latest $600 million vehicle, comprising a single contribution from the parent, has been earmarked for start-ups operating in the US and Israel, while doubling down on China.

"In the past, we focused on Asia, but now we're expanding to Israel, the US and a few other markets," says Kee Lock Chua, group president and CEO of VVH. "We don't consider ourselves as a fund-of-funds or a pure direct investment arm. We don't commit capital to managers outside of the group. While direct investment means that we make investments by ourselves in different countries and raise more money externally, we are only investing in funds from our balance sheet."

Vertex family funds raise about $120-200 million each. VVH makes LP contributions of $60-100 million. The funds focus on Series A and B rounds; each start-up receives about $2 million.

Vertex was an early investor in Singapore luxury e-commerce portal Reebonz and mobile taxi-booking GrabTaxi. Over the past two years, it has made several exits including mobile game developer IGG, which listed in Hong Kong in 2013, and Chinese app store 91 Wireless, which was sold to search engine Baidu.

While IT is the primary target sector for each fund, healthcare has been identified as a growth area. In addition to backing funds within the network, VVH has launched a sector-focused vehicle to invest in healthcare companies globally. It is part of the firm's captive funds strategy, is fully-funded by the holding company, and is managed by teams in Singapore and the US.

Chua adds that part of the $600 million will be reserved for co-investments alongside funds, although it's not a top priority. "Our strength is to help the portfolio companies expand cross-border," he says. "So even though each Vertex fund focuses on its respective market, we are able to help them expand globally because we have a presences in many locations."

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• Topics
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• Southeast Asia
• Vertex Management (II)
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