India-ASEAN GPs rethink Asia growth – AVCJ Forum

Improvements in South and Southeast Asia in terms of access to buyouts and regulatory cooperation with private equity, as well as a trend of GPs building up internal capacity to commit follow-on capital, are seen as positive signs.

However, there is a sense of ambivalence about how the rush of capital into the region in recent years was reshaping the investment landscape.

Sachin Bhanot, head of Southeast Asia at US-headquartered Prosus Ventures, noted that his firm expanded a strongly India-focused Asia agenda to include ASEAN in 2021. He added that during this period, there was a proliferation of country funds in the region – but left it an open question as to whether they could survive the current market retraction.

“You’ve seen the PE guys here go into venture. You’ve seen the venture guys go into private equity. You’ve seen the early-stage guys go late and the late-stage guys go early – just given how much capital there was,” Bhanot said. “I think it will be interesting to see over the next few years to see where the equilibrium is.”

Amit Varma, co-founder of healthcare-focused Quadria Capital, said investors needed to bring more domain expertise to the region. In India, the driving force is the need to outmanoeuvre fierce competition. In Southeast Asia, it’s more a case that skills are in too short supply.

Sandeep Naik, head of India and Southeast Asia at General Atlantic, observed that Southeast Asia is at a significant skills disadvantage to India, but that both regions have benefited from similar demographic profiles and digitalisation trends.

“A lot of tourist capital entered and that has messed up the dynamics of the industry with unlimited capital available, no focus on cost, and zero discipline on profitability,” said Naik. “That still needs to get washed away. It’s hard work working with entrepreneurs to stay the course and truly build sustainable profitable companies.”

Most observations about how the South-Southeast Asia opportunity has evolved dealt with the general maturation of the ecosystem. This – in addition to greater competition and in spite of the funding winter for companies – has put some onus on GPs to up their game.

“Companies now are not as dependent on the financiers in the way they were previously. In this new interest rate regime, it’s forced a lot of GPs to spend time around analytics, customer introductions, and governance help,” said Rajeev Natarajan, head of Asia Pacific, at Iconiq Capital.

“Previously you were just a financier, and today you genuinely have to be a value-added partner because in the absence of that, capital is still relatively abundant, and the founders still have a choice. That’s the big change we’ve seen in this part of the world.”

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• Topics
• South Asia
• Southeast Asia
• GPs
• Buyouts
• Expansion
• Singapore
• India
• Quadria Capital
• Prosus Ventures
• General Atlantic
• AVCJ Events