Creador raises $250 mn, to seal two Indonesian deals
The fund is yet to announce the close, which it achieved in mid-July
Kuala Lumpur: Malaysian private equity (PE) firm Creador has reached the first close of its Fund III at $250 million, an executive at the firm said. The fund is yet to announce the close, which it achieved in mid-July.
The executive, who spoke on condition of anonymity, said the fund, which was launched in April, was likely to reach its final close by the year-end.
“Creador is looking to raise $450 million in capital, expecting to wrap up by the end of this year,” this executive added.
DEALSTREETASIA earlier reported that Creador’s Fund III would have a target corpus of $450 million, with a hard cap at $500 million.
A first close means the fund has reached a certain threshold in terms of the amount raised and it can begin making investments and close deals, even as new Limited Partners (LPs) can continue to join it. A final close implies reaching the second threshold, with no LPs able to join after this point.
Creador chief executive officer Brahmal Vasudevan, former general partner and managing director of India-based ChrysCapital, told DEALSTREETASIA on the sidelines of the World Capital Markets Symposium 2015, held last week, that the firm was close to sealing two deals in Indonesia in October. “We still have a little bit of money left in Fund II, so we are closing two investments in October. Once these two deals are completed, we still start deploying Fund III,” he said.
He added that the firm expects to close its first deal under Fund III some time in the fourth quarter this year or the first quarter of 2016.
Vasudevan also said there was no change in Creador’s investment strategy, which involved primarily targeting Indonesia and Malaysia in South-East Asia, and India.
A portion of the fund will be diversified into the Philippines and Sri Lanka, he said.
“We are adding the Philippines and Sri Lanka into Fund III, but they will be no more than 10% of the third fund because they are new markets,” he added.
Creador’s Fund III was launched just eight months after the final close of its Fund II. Vasudevan said the firm has no plans to launch another fund soon. “Maybe in another three years, realistically; our target is to invest over three to five years,” he said.
As for the sectors the firm is interested in, Vasudevan said the team would be evaluating opportunities in healthcare, consumer goods and business services. “What we tend to avoid are cyclicals and commodities,” he said.
With a plethora of start-ups maturing in the markets, Creador may just look at smaller companies, a hairline shy of the middle market level. “One area we could potentially look at would be in the Series B and C stage, where the concept has been proven and these companies need capital for growth,” Vasudevan said.
Creador typically writes cheques of $10 to $50 million per company.
He also emphasized that Creador does not have the appetite for anything smaller than those ticket sizes.
Explaining the reason, he said: “When you put a fund together, typically you are looking to have a construct of 10-12 investments under it to create diversification and so on. If you have a fund size of $500 million, on average you will need to do $30 million to $40 million per deal. If we do small deals, it is generally harder as we will need so many more deals and we will be spreading our management bandwidth too thin.”
Creador being open to opportunities in the Series B and C deal scape is, however, reflective of what a number of PE firms such as KKR & Co. LP and TPG Capital LP are already doing.
Vasudevan added that Creador’s pedigree was in India, given his association with ChrysCapital before founding Creador.
“When you look at a market like India, you cannot bring a US-style private equity to play,” Vasudevan explained, “PE firms cannot bring control investments into India; it’s not a control market, it’s a largely a minority market.”
What works for Creador is that it finds successful entrepreneurs and provide them with growth capital. “The country is growing, the companies are doing well, the family of entrepreneurs generally do not want to sell. They only want to sell their weakest assets, and when the PE firms have a troubled asset, it’s much harder to deliver the returns,” he said.
This story was first published on Deastreetasia.com.