Fund focus: From Standard Chartered to Affirma

There are few emerging markets-focused GPs of scale, and for a while, Standard Chartered Private Equity’s (SCPE) continued status as one of them seemed uncertain. Those doubts have now been laid to rest with Intermediate Capital Group (ICG) backing a spin-out that removes the remaining $1 billion in assets off the bank’s balance sheet and creates a new GP called Affirma Capital.

“For various reasons, a whole bunch of pan-emerging market funds have moved out of the mid-sized company space. We are uniquely positioned as a fund which has longstanding local teams and experience in each of our markets, and yet is able to bring international governance and connectivity to portfolio companies,” says CEO Nainesh Jaisingh, who leads a team of 55, including seven partners.

Affirma has $3.6 billion under management across Southeast Asia, India, China, South Korea, the Middle East, and Africa. This includes about $650 million in dry powder – $400 million from ICG Strategic Equity and the rest through separate account mandates out of Korea. There are more than 50 existing positions, with Asia accounting for 75% of invested capital.

Standard Chartered decided it could no longer support a principal investment business off its balance sheet around 2012, but initially decided against a full spin-out. It completed five secondary transactions that saw third-party investors take ownership of around $2.3 billion in assets, with the SCPE team taking a minority interest in each new limited partnership and retaining management responsibilities.

A spin-out of the team and the remaining balance sheet assets – after the bank’s plans changed – fell through in late 2016. SCPE spent 12 months reestablishing credibility with LPs, stabilizing the portfolio, and reducing the team’s cost base in anticipation of revisiting the spin-out option. Actis acquired the SCPE real estate business in Asia last August, while the private equity team has secured about a dozen full or partial exits in the past two years, according to AVCJ Research.

New investments from the past 12 months include Korea’s Sung Gyung Foods, Singapore crane rental company Tat Hong Holdings, and Indian B2B travel platform Tek Travels. 

Even though conditions vary across the markets in which Affirma operates, there are some consistent themes. “We frequently see ourselves using experiences in one market to solve problems for investees in other markets,” Jaisingh explains. “The gradation of development stages across markets is actually even more helpful in that context.”

As such, when examining the options for an independent future, the team decided that the advantages of staying together were unique and not replicable. “The biggest challenge is to align interests of different parties – the bank, the third-party investors and the team,” Jaisingh adds. “Full transparency and delivering for all stakeholders ensure that this challenge can be met.”   

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• Topics
• Secondaries
• GPs
• Growth
• Asia
• Standard Chartered Private Equity
• Affirma Capital
• Intermediate Capital Asia Pacific
• Secondaries