Temasek-linked Fullerton Fund Management has raised $100 million in a first close as it carves out its first Thai private equity (PE) strategy, per an announcement.
The firm said it has partnered with KBank Private Banking, Hatton Equity Partners, and Land and House Asset Management to launch this first-ever Thailand-focused PE strategy that is accessible to Thai investors in the form of mutual funds.
The strategy will leverage KBank Private Banking’s proprietary network in capital markets and business owners in Thailand, and tap into Fullerton’s proprietary deal flow and industry network for investment ideas, the Singapore-based asset management firm said.
Triphon Phumiwasana, business head at KBank Private Banking, said his unit previously offered two PE funds investing in international companies in 2019 and 2020, with the first fund generating approximately over 60%.
Fullerton said its new Thai PE programme is in the advanced stages of its capital-raising, with initial deployments already made into underlying companies.
Fullerton Thai PE will invest in eight to 12 mid-sized Thai family-owned businesses in transition, spin-offs from conglomerates and corporations, as well as Covid-resilient and Covid-recovery businesses.
The strategy will look at sectors including consumer retail, food, industrial and advanced manufacturing, education, information and tech, healthcare and medical services, financial and business services.
It targets to deliver returns of 2x multiple and 20% gross IRR over the strategy’s life of seven years.
“The Thai investable market is deeply underserved by private equity relative to the economy’s size. These companies are looking to alternative sources of funding like private equity in place of traditional bank loans as funding sources, especially in the wake of Covid-19,” said Tan Huck Khim, head of alternatives at Fullerton Fund Management.
Family-owned businesses in Thailand make up 75% of Thailand’s stock exchange, according to PwC’s 2019 Global Family Business Survey. These family-owned businesses also contribute to 80% of Thailand’s GDP and have a combined wealth of 30 trillion baht ($881 billion).
“With correlation between traditional asset classes breaking down, Fullerton has been strengthening its alternatives capabilities to meet rising investor interest and appetite in nontraditional segments. For Thai private equity, we will drive value creation for companies through well-honed strategies to grow their businesses, improve their balance sheets, as well as management quality, for downstream opportunities,” added Mark Yuen, chief business development officer at Fullerton Fund Management.
The Temasek-backed company invests in equities, fixed income, multi-asset, alternatives, and treasury management. Its assets under management (AUM) has grown to $39.5 billion as of the end of March 2022, $2.3 billion of which was in alternatives investment commitment.
Fullerton’s primary private assets strategy has deployed $886 million by the end of March 2022, and delivered 27% IRR since the programme’s inception in 2019.