Weekly digest - June 09 2021

09 June 2021

COVER STORY

Carried interest: Safe in Hong Kong?

Tax treatment of carried interest has been an issue of contention in Hong Kong for several years. Just when it seemed to be resolved, draft guidelines are causing disquiet.

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TALKING POINTS

THE IT CROWD

The pandemic is having a layered influence on investor appetite for technology. First and foremost, demand for all things tech has increased, but perhaps more interestingly, the biggest bets appear to have shifted from ideas around disruption and innovation to more familiar back-end upgrades. Headlines trumpeting outsized rounds for new-age artificial intelligence companies have mostly given way to more sober enterprise software offerings as companies simply try to stay afloat in an increasingly digital landscape.

This week alone saw at least three substantial deals in meat-and-potatoes IT services, with The Blackstone Group acquiring International Data Group from China Oceanwide Holdings for $1.3 billion and China’s Xforceplus closing a $200 million round. Meanwhile, BGH Capital has offered around $1 billion for Australia’s Hansen Technologies. These companies do have competencies in some cutting-edge stuff. But their attractiveness in current market conditions is less about breaking new tech barriers than getting legacy systems up to speed.

In the end it was a virus, not a widget, that caused the most disruption. To some extent, this has repositioned tech more as a means of survival than the driving force behind industrial change. It will be interesting to see if recognition of this nuance in the zeitgeist can inform any contrarian approaches to the sector. 

In Depth:
• Asia technology: Anatomy of a rebound – May 2021

• China AI: A rude awakening – September 2020

GP PROFILE

HOSEN CAPITAL

From renminbi funds to US dollar funds and from growth equity to buyouts, Hosen Capital has been through several evolutions in its first decade. Meeting China’s food needs remains a constant
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FUND FOCUS

UNICORN DOES THE HARD YARDS

Six-year-old Unicorn Capital Partners has closed its fourth China VC vehicle at the hard cap of $450 million, proving there is demand for fund-of-funds that offer something different.

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DEAL FOCUS

CVC GETS INTIMATE WITH A BATHING APE

CVC Capital Partners has completed a complex carve-out of Japanese streetwear brand A Bathing Ape from diversified Hong Kong-listed retail group I.T.
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DEAL FOCUS

TEC GOES BACK TO THE OFFICE

KKR and Tiga Investments have acquired Hong Kong’s The Executive Centre at a time when flexible office space is coming into focus, but expansion ambitions need to remain in check.

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SEEN AND HEARD

ASEAN TECH FOR SALE

INSEAD and Golden Gate Ventures predict that the number of exits in Southeast Asia will more than double in the next few years. They tracked 108 exits in the region last year and expect this figure to jump 59% during 2021 to 172, and hit 223 in 2024. M&A will drive 80% of activity, followed by secondaries (15%) and IPOs (5%). Much of the optimism is pinned on pandemic-driven appetite for tech and the rise of special purpose acquisition companies (SPACs). 
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SEEN AND HEARD

MEGATRENDS FOR DINNER

Asia’s annual spend on food will double to $8 trillion by 2030, when the region will become home to 65% of the global middle class, according to agribusiness private equity firm Proterra Investment Partners. This may be the decade food transitions from specialized category to mainstream sector as its tech-enhanced momentum overlaps with themes around health, climate, consumerism, and economic independence. Proterra sees massive upside in Asia, noting China’s $910 million plant-based meat market is already 33% larger than that of the US. 
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The rest of the week

FUNDRAISING

• Orchid Asia reaches $1.1b first close on Fund VIII

• KV Asia hits $100m first close on Fund II

• TA raises $12.5b for 14th flagship fund

• Singapore's Heritas hits first close on Asia impact fund

• China's Oceanpine raises $312m for renminbi hard-tech fund

• Singapore's iGlobe completes $100m fundraise

• India micro VC player Artha raises $30m debut fund

DEALS

• Primavera buys Reckitt’s China formula business for $2.2b

• India's Urban Company closes Series F, hits $2.1b valuation

• Australia's CPE exits Cell Care to US strategic

• Carlyle commits $439m to India's PNB Housing Finance

• China renovation materials trading platform raises $400m

• China mRNA specialist Stemirna gets $200m in funding

• Thailand's Flash Express secures $150m in new funding

For your calendar

UPCOMING EVENTS

• June 23 - AVCJ Chinese PE & VC: The outlook for Q3 and beyond

• July 26-28 - AVCJ Australia & New Zealand Forum

• August 2 - Infrastructure Investors Forum Asia

• August 3-4 - AVCJ Singapore Forum

• August 5 - Southeast Asia M&A Forum

Regional Reports

Industry Review

Weekly digest - June 09 2021

Asian GPs slow implementation of ESG policies - survey

Singapore fintech start-up LXA gets $10m seed round

India's InCred announces $60m round, claims unicorn status

Insight leads $50m round for Australia's Roller