SE Asian corporates eye PE collaborations – AVCJ Forum

Speaking at the AVCJ Singapore Forum, Meliza Rusli, chief of corporate development and strategy at Indonesian conglomerate Astra International, said corporates in the region are willing to work with disruptive start-ups so they can access the latest technology-enabled business models. This often means taking minority stakes rather than seeking control, and GPs with experience in growth investments can be valuable partners in these deals.

“In the past it was quite difficult for corporates like Astra not to try to take control of target companies, but due to changing dynamics we are now more open to becoming minority partners in those businesses,” said Rusli. “That means we are constantly talking to other investors, including private equity, to understand how we can create value together.”

Moreover, business owners in Southeast Asia are increasingly aware that private equity and strategic investors can add value in different ways, which has further helped to build trust among the three groups. GPs and business owners see large corporates as invaluable sources of expertise and resources for executing growth plans.

“There is a successful model in the core business, and usually an infrastructure that has supported every phase of the core business, from start-up to SME [small and medium-sized enterprise] to large listed company,” said Yoke Kee Ang, who runs the family office and private investment vehicle for the founder of Malaysia’s Mah Sing Group. His responsibilities include managing strategic investments and partnerships for the group.

Large corporations can also benefit from bringing PE investors as partners in their own businesses. Denise Tjokrosaputro, business director at Indonesian family-held conglomerate Paramount Enterprises, described a recent case in which the company was seeking a partner to grow one of its healthcare businesses. 

Paramount received investment offers from several industry peers, but turned them down due to concerns about having competitors as long-term minority investors. The company decided to accept an investment from a private equity firm, which it knew was primarily interested in financial returns and would be required to exit after a relatively short period. 

“We both understand that they’re not in it for the long term, and we want that,” said Tjokrosaputro. “We only need them as a source of funds, rather than using our own equity. But within a given time limit we can grow together, we can discuss their exit strategy and our options, and in that sense we can be aligned.”

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