SINGAPORE – A Singapore-based private equity firm started by two former investors from sovereign wealth fund GIC has raised US$567 million (S$769 million) to spend on deals across South-east Asia and India.

The amount generated by Growtheum Capital Partners is one of the largest in the region in 2023, 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 2022, according to S&P Global data.

“Businesses that desperately need your capital, you may not like. But businesses that are doing very well may not have any need for your capital,” Mr 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.”

Mr Kunal was formerly GIC’s managing director of private equity in South-east Asia, while Mr 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 joined GIC as it was ramping up its private equity investments, making major bets ranging from Philippine snack maker Monde Nissin to Indonesian e-commerce platform Bukalapak.com.

Between March 2012 and March 2022, GIC grew its allocation from 11 per cent in private equity and infrastructure to 17 per cent 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,” Mr Kunal said, referring to limited partners.

After more than a year of effort, its backers today include the Asian Development Bank and the World Bank’s International Finance Corp. Singapore’s investment company Temasek is also an investor, according to people familiar with the fund raising.

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

To help win over Asia’s founders, Mr Kunal said he and his team did extensive homework.

He has set a yearly goal of reading 100 annual reports from companies he has not invested in, and said he spent almost five years consuming a Vietnamese company’s yogurt and dairy products before finally making an investment earlier in 2023.

The firm aims to invest across a swathe of sectors in South-east Asia and India. It is looking to do transactions ranging from around US$50 million to US$300 million, Mr 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 has not been spared from the downturn that has hit private equity since 2021. Both Monde Nissin and Bukalapak were listed publicly, only to see their share prices drop subsequently.

Growtheum’s fund raising is lower than targeted initially. It comes after Asia-Pacific deal values fell 44 per cent in 2022 from a year earlier to US$198 billion, according to data from Bain & Company. 

“Our deals were all done in the last 12 months, so we were still very much in the bad times,” Mr 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 invested in the fund, sat on its panel of advisers, or done both, Mr Kunal said.

Advisory members would not 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 Elang Mahkota Teknologi, better known as Emtek.

Another adviser is Indonesian scion Arif Rachmat, who met Mr Kunal when GIC was conducting due diligence on his family’s company Triputra Agro Persada. 

While some public servants would have treated Mr Rachmat’s business as just another transaction, Mr 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 organisations like GIC, they strike out on their own,” Mr Rachmat said. “His competitive edge is utilising and optimising 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 South-east Asia has the liquidity or consumption to be an immediate replacement for China, both should theoretically gain as supply chains broaden and consumers increase their wealth.

“South-east Asia is becoming a very exciting opportunity,” Mr 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.” BLOOMBERG