Tower Capital closes maiden SE Asia PE fund on $379m
Singapore’s Tower Capital Asia, which has historically invested on a deal-by-deal basis, has closed its debut blind pool private equity fund for Southeast Asia on USD 379m.
The capital comprises USD 324m in primary commitments and USD 55m in co-investment commitments from institutional investors and family offices globally. A first close of USD 250m came in January last year. The target was USD 300m.
Tower Capital was founded in 2016 by Danny Koh, who previously led the Southeast Asia private equity team at Actis and 3i. It has almost USD 500m under management across private equity and strategic solutions.
“The prevailing private equity fundraising environment has been a challenging one, encumbered by global geopolitical tensions and macroeconomic uncertainties. Despite these challenges, we gained positive momentum with institutional limited partners, who are increasingly looking for quality managers to partner with in this part of the world,” Koh said in a statement.
“Relative to other markets globally, Southeast Asia remains a growth haven with robust fundamentals and an expanding private equity opportunity set.”
The fund is expected to acquire 6-7 middle market companies with enterprise valuations of up to USD 350m across Southeast Asia but with a focus on Singapore. Business services, consumer, education, healthcare, and manufacturing are areas of interest.
About 40% of the capital has been deployed to date across three investments, including two education players, I Can Read Asia and Indigo Education, and corporate services provider Boardroom. The latter was carved out from Singapore-listed GK Goh Holdings last year at a valuation of SGD 312m (USD 231m) via a joint venture with Temasek Holdings-linked 65 Equity Partners.
Historically, standout deals include the SGD 269m delisting of traditional Chinese medicine brand Eu Yan Sang in 2016 alongside Temasek and the SGD 276m take-private of logistics provider Poh Tiong Choon in 2017.
Tower Capital claims to be able to access proprietary deals that other middle-market players cannot. It incorporates a flexible approach in terms of control, acknowledging the difficulty in taking over longstanding businesses in the region. This includes minority influence over operations and capital protections.
“Our strategy fits the market because the Southeast Asia market is relatively shallow,” Koh told AVCJ last year.
“If you fish in a shallow pond, you need to look far and wide – you need to be more deliberate, diligent and careful. Also, after being in Southeast Asia long enough, you realize that the lack of homogeneity works against a cookie-cutter style of doing deals. The shallowness makes it hard for specialists because the deals, by definition, tend to be more opportunistic.”
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