A Singapore-based private equity firm started by two former investors from sovereign wealth fund GIC Pte has raised $567 million to spend on deals across Southeast Asia and India.

The amount generated by Growtheum Capital Partners is one of the largest in the region this year, according to data from Preqin. The firm was founded by managing partner Amit Kunal and partner Choo Koon Po in late 2021.

Growtheum’s close comes at a challenging time for the private equity industry globally, representing a bet by backers that the region can offer lucrative returns despite slowing growth and shrinking valuations. Fund launches are on course for a steep decline in 2023 compared with last year, according to S&P Global data.

“Businesses who desperately need your capital, you may not like. But businesses that are doing very well may not have any need for your capital,” Kunal said in an interview, adding that the fund aims to have as many as 12 investments. “The differentiating factor is what you can do for the company.”

Kunal was formerly GIC’s managing director of private equity in Southeast Asia, while Choo was a vice president in the same unit. They joined the sovereign wealth fund more than a decade ago, having met earlier when they worked at Bank of America Merrill Lynch.

The two came to GIC as the firm was ramping up its private equity investments, making major bets from Philippines snack maker Monde Nissin Corp. to Indonesian e-commerce platform PT Bukalapak.com. Between March 2012 and March 2022, GIC grew its allocation from 11% in private equity and infrastructure to 17% in private equity alone.

Yet when the two men left to launch Growtheum from a shared office during Covid-19 lockdowns, they were off to a slow start.

“At GIC we never raised money and we worked in the direct investments group so we didn’t have contact with any of the LPs,” Kunal said, referring to limited partners.

After more than a year of effort, today its backers include the Asian Development Bank and the World Bank’s International Finance Corp. Singapore state-owned investor Temasek Holdings Pte is also an investor, according to people familiar with the fundraising.

Representatives for Growtheum and Temasek declined to comment on the latter’s participation.

To help win over Asia’s founders, Kunal says he and his team conduct extensive homework. He’s set a yearly goal of reading 100 annual reports from companies he hasn’t invested in, and said he spent almost five years consuming a Vietnamese company’s yogurt and dairy products before finally making an investment earlier this year.

The firm aims to invest across a swathe of sectors in Southeast Asia and India. It’s looking to do transactions ranging from around $50 million to $300 million, Kunal said. Some of its initial deals involved integrating technology into more traditional sectors while others are pumping capital into the expansion of hospitals.

Despite the bullish talk, the region hasn’t been spared from the downturn that’s hit private equity since 2021. Both Monde Nissin and Bukalapak were publicly listed, only to see their share prices subsequently drop.

Growtheum’s fundraise is lower than initially targeted. It comes after Asia-Pacific deal values plummeted 44% in 2022 from a year earlier to $198 billion, according to data from Bain & Co.

“Our deals were all done in the last 12 months so we were still very much in the bad times,” Kunal said, while adding that “opportunities are there.”

Family Backing

A hallmark of Growtheum’s deals so far has been the involvement of several prominent families from across the region, many of whom have either invested in the fund, sit on its panel of advisers or do both, Kunal said. Advisory members wouldn’t work on any situations or deals where they or related parties could potentially be involved, he added.

The firm is close to the family behind PT Elang Mahkota Teknologi, better known as Emtek. Another adviser is Indonesian scion Arif P. Rachmat, who met Kunal when GIC was conducting due diligence on his family’s company PT Triputra Agro Persada.

While some public servants would have treated Rachmat’s business as just another transaction, Kunal stayed in touch for over a decade. That helped convince him to invest in Growtheum.

“A lot of people would question anyone’s ability when, having worked at organizations like GIC, they strike out on their own,” Rachmat said. “His competitive edge is utilizing and optimizing his network to come up with new ideas and new ventures.”

Growtheum and its backers say the firm’s target markets are primed for long-term growth. While neither India nor Southeast Asia have the liquidity or consumption to be an immediate replacement for China, both should theoretically gain as supply chains broaden out and consumers increase their wealth.

“Southeast Asia is becoming a very exciting opportunity,” Rachmat said. “You don’t have to travel — all you have to do is stay in Jakarta and Singapore and people come to see you.”

--With assistance from Faris Mokhtar and Yoolim Lee.