Start@SG

Tech's the way to connect a wealth of deals across borders

Mr Lesselin of Finquest (top) and Mr Pallas of Opportunity Network.
Mr Lesselin of Finquest.PHOTOS: FINQUEST, OPPORTUNITY NETWORK
Mr Lesselin of Finquest (top) and Mr Pallas of Opportunity Network.
Mr Pallas of Opportunity Network.PHOTOS: FINQUEST, OPPORTUNITY NETWORK

Two start-ups aim to help bring together investors and mid-sized Asian businesses seeking growth

It is no secret that Asia is where the growth is. And investors who are truly savvy also know that some of the best growth opportunities lie among mid-sized Asian firms.

The problem, however, is that it is tough for an investor to get to know such firms, many of which are family-run and tend to keep a low profile. Conversely, it is also difficult for many mid-sized Asian companies to find investors within their limited networks.

Technology is about to change all that. Two start-ups, Finquest and Opportunity Network, recently set up operations in Singapore, seeking to create a more efficient marketplace for businesses and investors to meet and strike deals.

Finquest's platform connects three groups - institutional investors, corporate advisers and mid- sized Asian firms.

Chief executive and co-founder Tanguy Lesselin said the ultimate aim is to connect investors all over the world with Asian companies looking to do deals of between US$10 million and US$150 million (S$13.8 million and S$208 million).

These could include mergers and acquisitions, private equity deals or more complex debt arrangements.

THE ONES IN-BETWEEN

There are an estimated 500,000 companies in Asia with revenues of above US$2 million and up to US$100 million and private equity has financed only 0.7 per cent of them... Their financing needs are under-served - they are too small to access public markets and too big or too old to access venture capital or peer-to-peer lending platforms."

MR TANGUY LESSELIN, chief executive and co-founder of Finquest

"There are an estimated 500,000 companies in Asia with revenues of above US$2 million and up to US$100 million and private equity has financed only 0.7 per cent of them," Mr Lesselin noted.

"Their financing needs are under-served - they are too small to access public markets and too big or too old to access venture capital or peer-to-peer lending platforms."

At the same time, there is increased appetite among institutional investors to make direct investments into mid-sized firms.

"One of the biggest value-creation drivers in private equity is what we call 'build-up' - consolidating companies and creating regional champions," Mr Lesselin added. "So we see increasing demand for identifying mid-sized companies that could fit into this strategy."

Corporate advisers come in once there is a match, to help the company prepare for foreign investment.

"It is a lot of work, to be frank," said Mr Lesselin, a former strategy consultant at the Boston Consulting Group.

"You have to prepare the company to adjust its expectations, prepare a business plan, educate them on how to work with a foreign investor. That's why we rely a lot on M&A (merger and acquisition) advisers."

Mr Lesselin's three co-founders have professional experience in technology, M&A law and banking.

Finquest was officially launched in July. Deals generally take six to 18 months to close, so it has not seen any completed transactions yet.

Opportunity Network, meanwhile, began when its founder Brian Pallas was still getting his MBA at Columbia Business School.

As part of the MBA programme, he joined its Family Business Club, where the next generations of renowned family business owners receive training and also network with their peers.

"My father, Jimmy, runs a company that manages entertainment events such as tours by The Rolling Stones and AC/DC, or private parties for the wealthy," he said.

"I found the next generation of businesses that I felt my family could serve, but it is not that easy to broach the subject of deals discreetly. I can't say 'Do you want to have a private party next weekend with Mariah Carey singing?' because it would be quite an unclassy way to solicit business."

His solution was to create a monthly newsletter where members of the club could anonymously list the business transactions they were interested in.

The newsletter quickly grew to include members of similar clubs from other top global MBA programmes such as the London Business School, Insead and Harvard Business School , and soon Mr Pallas was looking at turning his idea into a global business.

Opportunity Network does not take on direct members, but aggregates the members of other elite clubs, such as the high-net worth clients of private banks. This ensures the platform's users have been vetted and invited by a reputable financial institution or professional organisation, Mr Pallas said.

They can then use the platform to connect and post opportunities focusing on their business interests ranging from M&As to commercial partnerships and capital raising or deployment.

Since its founding in 2014, the platform has generated deals worth more than US$35 billion, originated by 13,000 companies across five continents.

And because it relies on other financial institutions to invite members, it has garnered a lot of support from banks worldwide.

"Our goal is to introduce clients to as many business partners as possible and we do not make a cut on any deal closed... Banks are very willing to partner with us and introduce us to their clients as a sales origination tool," Mr Pallas said.

The platform also benefits the banks directly, he added.

If HSBC brings a particular client onto the platform, his HSBC relationship manager will receive a notification when he posts or connects with an opportunity.

"This gives the relationship manager the chance to up-sell or cross-sell solutions that are targeted to his investment interests. Most common types of bank services we have encountered include due diligence, corporate lending, and foreign exchange cash management," Mr Pallas said.

Opportunity Network is building business development teams in Singapore and eight other countries across the region and is starting conversations with top banks in each of these countries, he added.

A version of this article appeared in the print edition of The Straits Times on October 20, 2016, with the headline 'Tech's the way to connect a wealth of deals across borders'. Print Edition | Subscribe