Delta Capital closes Myanmar fund at $70m

Backers included family offices from Europe and Asia, as well as an unspecified number of global institutions and corporates, and three European development financial institutions (DFI). The firm decided to end the fundraise before achieving its target due to difficulties related to the negative press coverage of the Rohingya refugee crisis in Myanmar’s western regions since mid-2017.

“Development financial institutions, including European DFIs, are very familiar with emerging markets and some are keen to enter or expand their operations in Myanmar,” Alexandra Vanderschelden, a director at Delta, told AVCJ. “However, with DFIs being government-sponsored entities in most cases, the events in Rakhine State impacted their ability to make initial or new commitments to Myanmar.”

The fund, known as Myanmar Opportunities II (MOF II), was launched in 2016 and reached a first close of $30 million in November of that year. About 30% of the corpus has already been allocated. Delta said it plans to go back to the market after a “significant” portion of MOF II has been invested. MOF I raised $50 million in 2013 and has been fully allocated across five investments in the consumer, telecom, manufacturing and energy and resources sectors.

MOF II will follow a similar mandate while also considering investments in financial services, logistics, healthcare, and education. The plan is to leverage rapid technology uptake and a growing middle class, as well as opportunities related to Myanmar's recent economic liberalizations, including a focus on daily consumables with a national footprint. Previous investments under this strategy have included Myanmar Dairy Nutrition and local whiskey producer Asia Beverages.

“We believe that, over the years, there will be waves of positive and negative PR on Myanmar that will affect investments, access to debt, and exits — with a subsequent impact on valuations,” Vanderschelden added. “Beyond these waves, many investors and strategic players are attracted by the unique macro opportunity in Myanmar, and there are now precedents of significant transactions. This has a material impact on decision making.”

Recent private equity activity in the country includes TPG Capital exiting a 5% stake in Myanmar Distillery Company to Thai Beverage for about $42.5 million. The transaction also included Thai Beverage paying almost $700 million for controlling stakes in two related holding companies. Separately, Anthem Asia has launched a $50 million Myanmar fund and PE-backed ride-hailing company Grab has committed $100 million to a local expansion effort.

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• Topics
• Southeast Asia
• Fundraising
• Growth
• Myanmar
• Consumer
• GPs