Malaysia’s CIMB and Standard Bank have officially launched the South East Asian Strategic Assets Fund (SEASAF), a US$250mn private equity fund investing in the infrastructure, energy and natural resource sectors and associated industries in Southeast Asia. The fund focuses primarily on Malaysia and Indonesia with secondary focus on Singapore, Thailand, Brunei, Myanmar, Laos, Philippines, Cambodia and Vietnam.
SEASAF is sponsored by CIMB Group Sdn Bhd and Standard Bank Plc, and is co-sponsored by the Employees Provident Fund (EPF) of Malaysia.
CIMB and Standard will work through two joint venture companies. The first is South East Asian Strategic Assets (General Partner) Limited, the general partner responsible for the management of SEASAF. The second is CIMB Standard Strategic Asset Advisors Sdn Bhd which will act as the advisor to the general partner on matters concerning investment selection and strategy, divestments, deal structuring and execution, negotiations, transaction monitoring and valuations. Both the general partner and the advisor are to be owned as to 60% CIMB and 40% Standard.
To date SEASAF has secured total capital commitments of US$100mn from CIMB, Standard and EPF. SEASAF aims to secure US$250mn of committed capital within 18 months and will market itself to local and foreign institutions and high net worth individuals, with a minimum investment of US$5mn. The fund has a term of 10 years with an option of two further one-year extensions and targets a US dollar internal rate of return for its investors over the life of the fund of 20% per annum.
“The energy, infrastructure and natural resource industries are considered strategic assets in all the economies in Southeast Asia and are therefore pivotal to the region’s economic development,” says Dato’ Nazir Razak, group chief executive, CIMB Group.
“The fund will be a partner to and provide risk capital for viable and profitable businesses in strategic assets. As the largest investment bank in the region, CIMB Group is committed to playing an active role in the region’s growth. We believe the tie-up with Standard Bank, which focuses and specialises in emerging markets, offers a unique value proposition both to investors of the fund and businesses in strategic assets. US$250mn is a good size to launch at and gets us quick off the mark. We hope to launch larger ones once SEASAF has been substantially invested.”
SEASAF’s sponsors believe that the region’s underlying growth trends together with the strong demand for risk capital in these sectors provides an excellent investment opportunity for the fund. SEASAF in turn will benefit significantly from the support of its sponsors, given CIMB Group’s growing presence and operation in the region and Standard Bank’s strength and global investment banking expertise in emerging markets and the energy, infrastructure and resource sectors.
SEASAF’s investment will be in the form of equity and mezzanine capital. Its portfolio will largely comprise investments in privately managed and controlled operating companies, together with brownfield expansions, privatisations, restructurings, project financings and reserve-based transactions as well as publicly-listed companies. SEASAF may also invest in companies incorporated in and/or domiciled outside the region if the principal asset(s) of the investee entity are located in the region. Any investments in new or greenfield developments will be highly selective.
The fund will typically invest into, or alongside, experienced infrastructure, energy and resource companies with a strong management team. Each investment will have a clearly identified exit strategy. The general partner and its advisor will consider all exit options to maximise investor returns, including listing SEASAF on a regional stock exchange.
CIMB and Standard have appointed Vijay Sethu as the chief executive officer of CIMB Standard Strategic Asset Advisors Sdn Bhd. Sethu has extensive project finance and M&A experience in Australia, Asia Pacific and Latin America. Before his involvement with SEASAF, Sethu was with ANZIB in Singapore under various positions.