Temasek taps homegrown fund to help SMEs take next step

Temasek taps homegrown fund to help SMEs take next step

SINGAPORE - Another helping hand has been extended to small and medium enterprises (SME) that are on the cusp of greatness.

Temasek Holdings has tapped homegrown hedge fund Dymon Asia Capital to manage an initial $203 million of public and private funds, which are aimed at growing local SMEs regionally and internationally.

The newly created Dymon Asia Private Equity fund is hoping to invest in Singapore and South-east Asia-headquartered companies with revenues of between $10 million and $500 million, revealed Dymon Asia Capital founding partner Keith Tan, who will lead the fund with private-equity veteran Gerald Chiu.

"Funds have traditionally focused on the larger economies of China, India and Australia, or looked to invest in larger companies in South-east Asia," Mr Tan told BT.

"Companies here which need less than $50 million for growth capital or for a buyout generally do not get the attention they deserve from the large funds. There are some excellent companies in this space, who need the capital for overseas expansion or acquisitions, and who need a good partner who can provide both the capital and the expertise."

The fund, which has an eight-year lifespan, closed its first round of fund-raising last week with $100 million from Temasek's SME-focused fund, Heliconia Capital Management, and $103 million from private investors. The fund plans to raise at least another $100 million eventually, Mr Tan said.

Heliconia's contribution was part of an initial $250 million seed injection by the Singapore government under an SME-nurturing programme. The size of the programme is expected to hit $1.5 billion eventually, and comprise equally matched public and private capital.

The Dymon outfit will join a small but growing number of private-equity funds looking for opportunities here and in the region.

In August, Heliconia placed some capital with private-equity fund Credence Partners, which is led by long-time tech investor Koh Boon Hwee, to invest in SMEs. Sirius Venture Capital, started by CrimsonLogic chairman Eugene Wong, has been in the space since 2002.

The Dymon fund will look for "sweet-spot" investment sizes of $20 million to $50 million, Mr Tan said. The length of each investment will vary, but business plans will typically take three to five years to execute.

Education, healthcare and branded food-and-beverage companies that will benefit from the growing incomes in the region are particularly interesting, said Mr Tan. The oil and gas sector and specialised engineering and industrial services also have potential, he added.

"However, within the SME space, there are often hidden gems with unique strengths in any sector."

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