Navis seeks up to $1.3b for ninth Asia fund

Rodney Muse, the firm’s co-managing partner, told Mergermarket, AVCJ’s sister title, that the new fund will be “definitely launched” verbally before the end of 2023 and then go to market in the first quarter of 2024. The target will be between USD 1bn and USD 1.3bn.

Navis has not begun soft marketing, although the firm is constantly in touch with LPs to update them on what “we’re doing and the amount of undrawn capital we still have available that gives us the kind of runway to launch and raise the next fund,” Muse said.

He acknowledged that the fundraising environment is “very tough.” Approximately USD 107bn was committed to Asia-focused funds – excluding renminbi-denominated vehicles – in 2022, up 9% on the previous year, according to AVCJ Research. However, the number of funds achieving a partial or final close fell by more than one-quarter. Asian managers have raised USD 34.7bn in 2023 to date.

Navis encountered difficult market conditions when raising its eighth fund, which launched in 2019 with a target of USD 1.75bn. A final close came in mid-2021 on USD 900m. The firm also raised a USD 450m continuation vehicle comprising six companies from its 2010 vintage sixth fund. Some investors in the continuation fund made primary commitments to Fund VIII.

Malaysia-headquartered Navis, which has more than USD 5bn under management across private and public equity funds, has completed more than 80 control transactions since its establishment in 1998 and made over 80 follow-on investments.

Fund IX will follow the same strategy as its predecessors, pursuing controlling interests in established mid-market companies in Southeast Asia and selectively in Greater China, Australia, and New Zealand. Equity investments will fall in the USD 30m to USD 150m range. Preferred sectors include healthcare, education, food and beverage, consumer products, and industrial manufacturing.

Muse highlighted opportunities in areas that have demonstrated resilience coming out of the pandemic, are not too aspirational in nature, and are either insulated or benefit from geopolitical tensions raging between China and the US or Russia and Ukraine. He dismissed industries tailored mainly for the rich or ultra-wealth as “too aspirational.”

Since closing Fund VIII, Navis has invested in the likes of Vietnam-based food processing business Dan-D Foods Group, Thailand’s S-Spine and Nerve Hospital, family office-focused software provider Eton Solutions, which operates out of the US and Singapore, Thailand-based K-12 education provider Ambassador Education Group, and Australian software aggregation platform Software Combined.

The most recent investment, which closed in April, was Caring Group, a provider of in-home and clinical care for seniors and people living with dementia or disability in Australia. Local media reported that Navis paid AUD 150m (USD 95.2m) for a majority stake.

Nearly all the firm’s exits have been through trade sales to strategic investors, with a few going to private equity buyers. “We are only buying businesses that we believe will be of strategic relevance and interest to larger players in the same ecosystem or the same industry,” Muse said.

He added that there are currently 10 companies on the exit pathway, with five likely to be finalised by the end of the first quarter of 2024. Navis is reportedly looking to sell New Zealand-based egg producer Mainland Poultry, Singapore restaurant group Imperial Treasure, and Macau-based leather and sustainable materials supplier ISA TanTec, among others.

Mainland Poultry, which Navis has owned since 2017, has a Likely to Exit (LTE) score of 72 out of 100, the highest in the portfolio. Mergermarket's LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing, or a de-SPAC transaction.

Exits in 2022 included Adampak, a Singapore-based label and precision die-cut parts provider, B Medical Systems, a provider of sustainable medical cold chain solutions, and Torque Group International Fortune, a Hong Kong-headquartered producer of heel counters, toe puffs, and insoles used in athleisure footwear. All three went to trade buyers.

Navis launched a credit unit last year and recruited Justin Ferrier, formerly of BlackRock and ADM Capital, to lead it. Muse said the firm’s debut credit fund – which reportedly has a target of USD 350m – will reach a first close of USD 100m-USD 200m in early 2024. Earlier this month, Jack Ng and Nicholas Nugroho joined the credit team as directors. Nugroho will open the firm’s Jakarta office.

Muse said the private equity and private credit businesses as synergetic, noting that once Navis establishes a lending relationship with a target company or a founder, this could be converted into a private equity buyout opportunity. In this sense, credit represented a “logical evolution” for the firm.

“This is in terms of having another possible financial solution for small to midsize businesses that are high growth and profitable but are looking for growth capital of a different form, and in particular, for companies that are not prepared to cede control,” Muse explained.

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• Topics
• Southeast Asia
• Fundraising
• Buyout
• GPs
• Trade sale
• Credit/Special Situations
• Greater China
• Australasia
• Malaysia
• Navis Management
• Fundraising
• private debt