Actis Pursues Private-Equity Deals in Southeast Asia

Actis Capital Partners Ltd., a U.K. private-equity company with $5 billion in assets, is pursuing three to four deals in Southeast Asia and expects the region to attract more capital as the economic outlook improves.

Actis is focusing on industries including consumer, health care, education, industrial and financial service, said Director Danny Koh in an interview in Singapore yesterday. About $5 billion of capital will flow into the region over the next three years, with the highest growth rates in Indonesia, he said.

Private-equity investments in Southeast Asia are expected to increase in 2013 after plunging 47 percent in value last year from 2011, as the region’s growth lure investors looking for “greenfield opportunities,” Bain & Co. said in a report this month. Buyout deals, which typically are financed by using debt to acquire companies, totaled $1.65 billion over the past year in the region, according to data compiled by Bloomberg.

“Given the economic growth and changing demographics, the outlook for Southeast Asia is good, prompting investors to allocate more money to private equity,” said Koh, who joined Actis as head of origination in September after working for seven years in Singapore for another private-equity firm, 3i Group Plc.

Actis’s latest investment in Southeast Asia was in May 2010 when it funded the merger of KS Energy Ltd. and two other companies that created KS Distribution Pte, a Singapore company that provides oil, gas and marine products, Claire Davies, a spokeswoman for Actis, said by phone.

Finding Exits

The minimum deal size for the London-based company is $50 million in Southeast Asia, with transactions ranging between $50 million and $200 million in the region, Koh said. He declined to elaborate on fundraising or the status of current investments.

Recovery in the region’s stock markets is helping investors sell their assets, Koh said.

“As for exits, we are beginning to see higher prices,” he said. “Companies which have been underperforming due to economic reasons are beginning to see growth and margin improvements, which justify such pricing expectations.”

Still, striking private-equity deals remains a challenge in some of the Southeast Asian countries including Vietnam, Thailand and the Philippines because they are still fragmented, Koh said. A lot of deals are below the radar screen of the investment banks, he said.

“The approach to deal making in each of these countries may be different, which increases the complexity of deal making,” Koh said. “Most of the deals are not intermediated, they are created. A good network becomes all the more important for deal making.”

Private-equity inflows into the region will increase, with an industry wide internal rate of return between 15 percent and 25 percent over the next five years, Nicholas Bloy, managing partner at Navis Capital Partners Ltd., said in January.

Actis was established in 2004 to focus on emerging markets after spinning off from CDC, the U.K. government’s development arm, according to its website. Since then, the company has realized $2.2 billion from $867 million cash investments, it says. It has 10 offices in cities such as Johannesburg, Lagos, Mumbai and Beijing.

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