Issue 42

Malaysia’s Ekuinas divests stake in mobile transaction
gateway Tranglo to TNG for $27.6m

Malaysian state-owned private equity firm Ekuiti Nasional Bhd (Ekuinas) has exited its investment in Tranglo Sdn Bhd (Tranglo), a cross-border mobile transaction gateway company, by selling its 60 per cent stake to Hong Kong-based financial services firm TNG. 

In a statement, Ekuinas said it has divested its entire equity interest in Tranglo to TNG for MYR114.9 million ($27.6 million), marking the state-owned PE firm’s ninth exit so far, generating proceeds of more than MYR2 billion ($480 million). 

The divestment gives Ekuinas an internal rate of return of 26.8 per cent and money multiple of 1.96 times the capital invested. Founded in 2008, Tranglo operates a global money and digital credit hub that enables “easy and instant” transfer to friends or family. 

It currently facilitates airtime transfer and money remittance including in Southeast Asia, Hong Kong, and mainland China. “Tranglo successfully grew its money remittance volume by 15-fold since acquisition. We are confident that Tranglo will continue its strong performance over the mid-term,” Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir said. 

Syed Yasir Arafat added that the selection of TNG was made after a rigorous sale process that attracted global interest from several parties. “It was done on a merit-based process, where capability, resource, and alignment with management’s vision were equally as important as price. We want to ensure that the next partner would further catalyse the business,” he said. 

The buyer, TNG, is considered as the only financial services enabler for the 1.2 billion unbanked pan-Asian population across Hong Kong and 12 countries. Its flagship e-wallet application in Hong Kong, TNG Wallet, was launched in November 2015 and has since become one of the most popular e-wallets in the region. 

It was in 2015 when Ekuinas bought majority stakes in Tranglo for MYR54 million ($13 million), marking its maiden investment in the technology, media, and telecommunications (TMT) industry. The fund said the TMT industry is becoming “increasingly competitive”, driven by disruption from new fintech entrants. 

“As such, the decision to divest was based on several considerations: firstly, that it would be in line with Ekuinas’ strategy to continue crystallising its assets when the time and economic climate are right. Secondly, to identify a strategic partner that would be able to push the business into its next phase of growth,” it said in a statement. 

Early this year, Ekuinas divested its entire stake in local education company APIIT Education Group for $180 million to a joint venture vehicle owned by its existing management team and private equity firm KV Asia Capital. 

Ekuinas had invested in APIIT in 2011, buying a 51 per cent stake from Sapura Resources Bhd and in 2016 took over the remaining 49 per cent. Last year, APU launched its state-of-the-art campus in Technology Park Malaysia as part of a value creation plan for the group. 

It also sold 100-per cent equity interest in Tenby Education Group to International Schools Partnership for an undisclosed amount.

  From – Deal Street Asia


CIMB expects more M&As as Malaysia seeks to pare stakes in state firms

Malaysia could see a flurry of merger and acquisition (M&A) activity in the coming months as the government looks to pare down direct ownership in companies to raise funds, the chief executive of CIMB Investment Bank said. 

Bankers see opportunities in transactions that could emerge from sovereign wealth fund Khazanah Nasional’s portfolio rebalancing, or at other government-linked investment companies, Kong Sooi Lin said. 

“That’s where opportunities for us investment bankers are, whether in the advisory or M&A side. We are beginning to see traction in these two areas. We are seeing foreign firms making a lot of queries, looking for good assets to buy in Malaysia,” she told Reuters in an interview on Tuesday. 

Finance Minister Lim Guan Eng said on Tuesday that the government would reduce its equity ownership in companies to raise funds to pay down the country’s debt. 

The new government led by Mahathir Mohamad, who unexpectedly won a general election in May, has blamed the previous administration of Najib Razak for taking the country into debt of around 1 trillion ringgit, partly as a result of 1MDB, a failed state fund which is now the focus of corruption and money laundering investigations. 

Kong said there was no indication as to which sectors would be the focus of Khazanah’s portfolio rebalancing yet, “but it won’t be a cheap sale, they don’t need to sell cheap”. M&A activity in Malaysia slowed in the past two quarters, industry executives have said, in the lead up to the May elections and on lingering uncertainties following the shock change in government. 

Kong said promising sectors for M&A are consumer, healthcare, e-commerce and logistics, while consolidation in the oil and gas sector could be timely as oil prices have crept up. 

Khazanah owns significant stakes in some of Malaysia‘s largest companies such as CIMB, national utility firm Tenaga Nasional Bhd, regional telecommunications group Axiata Group Bhd and IHH Healthcare Bhd. Kong also said there could be streamlining of some of the government-linked investment companies’ assets overseas. 

“Property assets for divestment through M&A is something that will happen,” she added. Kong said 2019 would likely be a better year for big initial public offerings that were in the pipeline, following a muted 2018.

Malaysia‘s largest fast-food operator, QSR Brands, was looking to raise 2 billion ringgit in an IPO targeted before the end of 2018. 

Poultry business Leong Hup International was also working on IPO plans to raise as much as $600 million, sources have said.

From – Deal Street Asia

Grab to double investments in safety standard initiatives across SE Asia

Southeast Asian ride-sharing firm Grab on Tuesday launched its safety standard pack for the regional market with plans to double investments in safety measures by the end of 2019. 

The “Safer Everyday” programme was announced in partnership with government agencies across Southeast Asia to promote better health and transport security for Grab’s driver-partners and delivery-partners, as well as users. 

A series of other safety events, which include free health screenings, coaching sessions and road safety training programmes, will also be conducted within the next year. Grab is building a smart driver fatigue model that will automatically push out in-app messages to remind drivers to take a break when it detects that they are potentially tired. 

The algorithm will not only take into account the number of hours the driver has been on the road, but also includes telematics data, driver’s profile, time of day, rest between shifts and total number of bookings accepted. 

“The Safer Everyday Tech Roadmap is an extension of Grab’s current efforts in Southeast Asia, where we are the only major player to invest in foundations like a 24/7 customer support centre, number masking and stringent driver background checks and verification. 

We’re not going to compromise on our users’ safety, and that’s why even as Grab has grown much larger, safety remains a core part of our DNA and it was an easy decision to double our investment into safety next year,” said Grab’s co-founder Tai Hooi Ling. 

In Singapore, Grab drivers will have access to a more holistic healthcare programme including activities pre-emergency care and first-aid skills. In Cambodia and Myanmar, the focus is on road safety education and more driver training for the more informal, localised three-wheel driver community. 

Meanwhile, Grab Philippines will work with Philippine National Police, Land Transportation Franchising and Regulatory Board and Drug Enforcement Agency to tackle crime in the transport industry, and train more drivers to assist as emergency first responders for accidents and disaster relief on the roads. 

In Thailand, Grab will work with the United Nations to raise awareness and prevent violence against women and young girls as they commute in the city. Initiatives will be rolled out in Indonesia, Malaysia and Vietnam by the end of the year, the company said. 

Also on Tuesday, Grab officially introduced its payment solutions in Vietnam under the new brand GrabPay by Moca, following a strategic investment in the Vietnamese payment startup it announced last month. 

The launch of GrabPay by Moca is implemented by batches and is expected to be completed in October 2018. To use GrabPay by Moca, customers can either top up GrabPay by Moca e-wallet, or use international credit cards linked to the app.

From – Deal Street Asia

GREE Ventures backs seed round for Indonesian fintech startup CROWDE

Indonesian agriculture-focused fintech startup CROWDE has announced the closing of an undisclosed seed funding round led by GREE Ventures and joined by CREVISSE Partners and local prominent angels. 

In an official release, the company said it will use the capital to accelerate the development of its fintech platform targeted at Indonesia’s agriculture sector. 

Headquartered in the cities of Jakarta and Bandung, CROWDE targets the 40 million farmers in Indonesia struggling to secure capital and develop their businesses. Its vision is to transform all farmers into self-sustained agropreneurs and create an efficient agricultural value chain. CROWDE allocates capital raised through its platform to agricultural projects from investors seeking attractive returns and eager to invest in one of Indonesia’s core economic sectors. 

To date, CROWDE, which only funds projects that have a focus on agriculture, livestock, or fishery, says it has disbursed funds in excess of Rp30 billion ($2 billion) to 10,000 farmers in 276 villages across Indonesia. 

The capital was raised from more than 24,000 investors. “Our goal is to fund more than 100,000 farmers this year. We strive to remain the largest and most successful agriculture-focused fintech player in Indonesia with the support of our partners, investors, and under the supervision of local regulators,” said CROWDE CEO Yohanes Sugihtononugroho. 

Commenting on the investment in CROWDE, GREE Ventures investor Samir Chaibi said: “Among the many lending players in Indonesia, the team has demonstrated a unique ability to scale their platform leveraging a deep understanding of farmers’ needs and a strong operational playbook.” 

GREE Ventures, headquartered in Tokyo, is a leading venture capital investor in Asia, with a total AuM of US $120M. GREE Ventures has been actively investing across Japan, Southeast Asia, and India since 2011 with 50+ investments made so far, and focusing on Seed to Series A round. 

In a recent interview with DEALSTREETASIA, Chaibi said, GREE Ventures is looking to make up to three more lead investments in Indonesian startups by the end of the year. 

The VC, which has backed unicorn Bukalapak and fintech firm Ayopop and exited from Kudo and Urbanindo, teamed up with local community-driven initiative Innovation Factory to launch an accelerator in the country called SKALA, which will help it source the next promising startups to invest in.

From –Deal Street Asia

China’s GGV Capital raises $1.88b for new funds

US and Shanghai-based venture capital firm GGV Capital has closed its new funds at $1.88-billion, it said in an announcement on October 16.
The new funds include $1.36-billion in the firm’s main funds, GGV Capital VII and VII Plus, $460-million in GGV Discovery II focused on seed and early-stage opportunities, and $60-million in the GGV Capital VII Entrepreneurs Fund consisting largely of company founders as LPs. GGV Capital last raised $1.2-billion in 2016 across four funds. 

Earlier this year, it closed its first RMB-denominated fund at RMB 1.5 billion ($225 million). The latest fund brings GGV Capital’s total capital under management to about $6.2-billion across 13 funds. 

“We are excited and humbled by the support of new and longstanding partners such as CalSTRS (California State Teachers’ Retirement System), Oregon Public Employees Retirement Fund, Rockefeller Foundation and University of Texas Investment Management Company. 

“We also want to thank the founders and CEOs we work with for their dedication to building extraordinary companies, enabling the GGV team to continue to do what we love – support entrepreneurs and their vision to change the world,” said GGV Capital managing partner, Jenny Lee. 

Lee is one of the six managing partners for the new funds. The rest include Jixun Foo, Hans Tung, Glenn Solomon, Jeff Richards, and Eric Xu. Founded in 2000, GGV Capital claims to generate an IRR of more than 25 per cent. 

It has invested in 51 unicorns across US and China, where half of these were Series B or earlier-stage companies at the time of initial investments such as Airbnb, Didi Chuxing, Toutiao, Slack, and in Southeast Asia, Grab. 

Out of these 51 unicorns, 25 have gone public, such as Alibaba, Square, YY Inc., Zendesk. The VC firm said it returned more than $1-billion to its LPs in 2017 and 2018.

From – Deal Street Asia
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