SINGAPORE - United Overseas Bank (UOB) has tied up with Japanese financial services firm Orix Corp to launch a US$200 million (S$250 million) mezzanine fund on Thursday.
The United Orient Capital Fund, as it is called, aims to provide expansion capital to mid-sized companies in South-east Asia.
UOB said it is the first Singapore bank to launch such a fund, which will invest in mid-sized companies through loans or purchasing bonds and preference shares.
Eligible companies would have to have mature operations, strong cash flows and good management teams, said UOB. Other factors include the companies' market share, brand name and the industry's entry barriers.
Mr Terence Ong, UOB's head of global markets and investment management, said: "South-east Asia's fast-growing companies are seeking capital to help them tap the opportunities arising from the two megatrends in the region - increased consumer spending and intraregional trade."
He added that the fund provided an alternative source of financing to help companies to fulfill expansion ambitions and business development plans.
The fund is managed by United Orient Capital GP (UOC), a joint venture between UOB and Orix.
The two financial services providers are contributing an initial combined sum of US$100 million to the fund and aim to raise another US$100 million from institutional investors based in Asia.