Fund focus: Lakeshore remains one of Thailand’s few

Eight Thailand-focused private equity and venture capital funds have been raised in the last 10 years, according to AVCJ Research. This is approximately half as many as Malaysia or Vietnam and one-third the Indonesia or Singapore totals. Thailand even trails Myanmar, which has 10.

Most of the capital raised for deployment in Southeast Asia goes into sub-regional funds, but Thailand punches below its weight in terms of private equity deal flow as well. Investment over the past decade stands at $2.25 billion, placing the country sixth of the ASEAN 10. Thailand ranks fourth by population, second by GDP, and fourth by GDP per capita. Vietnam’s GDP is two-thirds that of Thailand, but it has received more than four times as much investment.

Panaikorn Chartikavanij, co-founder of Lakeshore Capital, doesn’t expect any near-term change in the status quo. “PE in Thailand is not easy. You need the right strategy and people for it, and by that I mean SMEs [small and medium-sized enterprises] are looking for people to help them transform their businesses and lead their growth agenda,” he says. “Capital is only part of the equation.”

Lakeshore recently became the ninth since 2011 to achieve a close – partial or final – on a Thailand fund. The firm reached a final close on its second vehicle at the hard cap of $150 million. The fund is more than twice the size of its 2014 vintage predecessor, which closed at $60.7 million. It is also the second-largest Thailand-focused private equity vehicle ever raised.

Fund II launched in January 2020 and a first close came within three months above the $125 million target. The International Finance Corporation (IFC) re-upped but Lakeshore’s reliance on development finance institutions has lessened in percentage terms. The LP base includes pension funds, fund-of-funds, insurance companies and other financial institutions that didn’t feature in the previous vintage because they don’t back first-time funds, Chartikavanij says.

“One of our key fundraising objectives was to focus on the further institutionalization of the investor base,” he adds. “We were able to quickly adapt to the new fundraising environment by conducting all outstanding due diligence virtually. We had managed to meet the majority of the investors in person before, so that facilitated the process.”

It helps that Fund I performance is encouraging. As of September 2019, Lakeshore Capital I was the second best-performing ASEAN-based fund with an IRR of 42.2%. This is underpinned by the sale of steakhouse chain Santa Fe to Singha Corporation for $50 million, after the number of outlets nearly doubled to 116; and a sell-down of HR services provider in 2018 Humanica following its IPO a year earlier. These exits generated returns of 2.7x and 13x, respectively.

Since the Preqin data were released, Lakeshore has completed a partial exit from Rojukiss International, which owns a portfolio of skincare brands. The company raised THB540 million ($17.3 million) through an IPO on the Bangkok Stock Exchange in February.

Chartikavanij doesn’t expect any change in strategy for Fund II. Business services, technology, consumer products and retail, healthcare, education, and logistics are still the key target areas. Check sizes will remain in the $10 million range, the increase in fund size allowing Lakeshore to make more investments rather than target larger deals.

The firm also considers opportunities in the Greater Mekong sub-region. “We have been opportunistically looking into CLMV [Cambodia, Laos, Myanmar, and Vietnam] and we will continue to do so,” Chartikavanij says. “We are actively driving growth at the portfolio company level by entering and expanding their footprints into these neighboring markets.”

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• Topics
• Southeast Asia
• Fundraising
• Growth
• GPs
• Thailand
• Lakeshore Capital Partners
• IFC
• Emerging Markets