Category: Finance

Warburg Pincus-backed D&J China launches US$1.45 billion industrial park fund with AVIC Trust

D&J Industrial Property China Investment Ltd., a business park and suburban office developer which is owned by Warburg Pincus through a majority stake, has launched a capital fund with AVIC Trust to invest in industrial infrastructures in China.

Co-founded by the Aviation Industry Corporation of China (AVIC) and OCBC Bank of Singapore, AVIC Trust is an investment and trust manager in China, with assets under management of over RMB430 billion (about US$62.18 billion).

With this partnership, the D&J Zhiyan Equity Investment Fund raises an initial equity capitalization of RMB10 billion (about US$1.45 billion), founded on a USD-RMB hybrid basis, which is said to be the first of its kind in China.

“In addition to helping tenants lower potential cost of land sourcing, infrastructure and facilities construction, the fund also seeks to provide integrated services in the areas of finance, data storage, consultancy, and R&D,” said the chairman of AVIC Trust, Yao Jiangtao.

The capital is dedicated to China’s industrial infrastructure landscape, where it will mainly be used to invest in modern integrated industrial parks in China’s major cities – backing projects which include business parks, production facilities, and R&D parks.

“Driven by a strong trend for an industrial upgrade, continued urbanization and rise of the knowledge economy, the fund will invest in quality assets and provide modern infrastructure services for corporates and manufacturers across the entire industry value chain,” said Sun Dongping, the co-founder and chairman of D&J China.

China’s D&J Industrial holding is the second real estate platform co-founded by Warburg Pincus and Sun Dongping, after the pair co-founded warehouse developer e-Shang in 2011.

Since its establishment, China D&J has completed two rounds of financing and currently has over 1.2 million square meters of operating and under development properties in Beijing, Shanghai, and other Chinese cities.

The company’s tenants portfolio include Shell, Abbott, and FMC, as well as high-tech knowledge economy companies – Asiainfo and iSoftStone.

D&J China targets to grow its assets to over 5 million square meters in the next three to five years, targeting to increase its total asset value to RMB45 billion by 2020.

By Vivian Foo, Unicorn Media

Temasek Holdings to take stake in Oxford Sciences Innovation

Singapore’s state investment fund – Temasek Holdings has become a limited partner in Oxford Sciences Innovation (OSI), which develops and commercialises intellectual properties from Oxford university.

Participating through the means of capital infusion, this is Temasek Holdings’ first investment in the UK-based university fund. The financial terms of the investment were undisclosed.

This is part of a larger £230 million (about US$ 289.9 million) financing round that was announced on December 9, which has boost OSI’s capital base to almost £600 million.

The investment round had both new and existing investors, including some of Asia’s leading technology corporations and sovereign wealth funds such as Singapore’s Temasek and Oman Investment Fund, which are among the new wave of investors.

“We are very excited to be working with new shareholders from across the world, notably from Asia and continental Europe, and also grateful to our original supporters, the 10 largest of which have participated in this funding round,” said the chairman of OSI, Peter Davies.

With the new funding round, OSI’s capital base which previously stood at £350m has now expanded to £580 million (about US$ 731 million), making it the largest private university fund in the United Kingdom.

“Raising this capital reflects our confidence in the breadth and quality of opportunity available to investors to help the University of Oxford develop a world-class commercial ecosystem around its unmatched intellectual capital and heritage,” Davies add.

Founded in 2015, the formation of Oxford Science Innovation (OSI) aims to maintain the university’s position as one of the world’s leading research institution, providing capital and scaling expertise to businesses that are driven by its in-house intellectual property.

To date, the fund has backed approximately 20 spin-out startups based on the technology from university’s labs. Among its track record of developed businesses include Oxford Nanoimaging, Vaccitech and Oxford Flow.

Temasek is reshaping its holdings and bracing for lower returns after in July reporting the first decline in its portfolio in seven years. The value of assets fell 9% to US$ 242 billion in the fiscal year ended March 31, according to the firm’s annual review.

Temasek Holdings Pte, Singapore’s state-owned investment fund, said it will focus on being an active investor as it increases holdings in overseas companies.

By Vivian Foo, Unicorn Media

Indonesian coal producer Bumi Resources to restructure debt, paring down US$ 2 billion via Preemptive Rights offering

Indonesian coal producer PT Bumi Resources Tbk (BUMI) is looking to restructure its finance. The company plans to swap its debts for share, through raising IDR 26.9 trillion (about US$ 2 billion) through a rights offering.

The company will issue up to 29.1 billion new shares which are equivalent to 79.5 percent of its enlarged capital with Preemptive Rights (ER). These 29.1 billion shares will then be sold at about IDR 926 per share.

The transaction is expected to take place in 2017, fetching a total amount of IDR 26.9 trillion – part of the company’s efforts to restructure its US$ 4.2 billion debt.

The debt is intended to be reduced to US$ 1.6 billion, of which US$ 2 billion will be converted into shares, while the remaining will become Mandatory Convertible Bonds (MCB) or mandatory convertible bonds with a seven-years term.

Bumi Resources will use the proceeds to pay off debts to China Investment Corporation (CIC) along with eight other lenders. In an event that shareholders are reluctant to participate, the creditors will absorb all new shares issued, allowing Bumi Resources’ obligations to be converted into shares.

Later, no interests will be converted into shares of the company.

“This way, the old shareholders are given the opportunity to keep their ownership, but at a higher sum than the company’s current stock price. This is already stated in the agreement between the firm and creditors,” said finance director at Bumi Resources, Andrew Beckham, in Jakarta recently.

In the proposal, CIC would control 22.6 percent of Bumi Resources’ shares while 2016 bondholders would get 4.6 percent, and 2017 bondholders would obtain 10.6 percent. Credit Suisse would also get 3.6 percent, UBS 0.8 percent, Axis Bank 0.8 percent, Deutsche Bank 0.7 percent, and Raiffeisen Bank International 1.2 percent.

Bumi Resources primarily exports coal to China, Japan, and India. The Bakrie family-controlled firm supplies 25 percent of its coal to the domestic market and aims to boost coal production up to 100 million tonnes next year following this agreement for a debt-restructuring scheme.

The company forecast its production to increase by 5 percent more with the sales target also increasing by 7 percent in the near future, considering the surging demand for coal in the country as a result of the government’s ambitious electricity procurement programme.

Known as the most indebted coal miner in Southeast Asia, Bumi Resources has spent half the decade trying to reduce its debt.

In August, the company sold 50 percent of its stakes in unit Leap Forward Resources Ltd to two investors – Smart Alliance Ltd and Oceanpro Investments – in a US$ 90 million deal. The transaction was used to repay part of the company’s debts to Axis Bank Ltd, according to corporate secretary Dileep Srivastava.

On Friday, Bumi Resources shares increased by 0.68 percent to close at IDR 296 per share, against a 0.08 percent gain in the broader index.

By Vivian Foo, Unicorn Media

Seedcom-Backed Cau Dat Farm Brings Smart Technology Into Vietnam Agricultural Production

Looking past food delivery startups or applications that do grocery shopping for the urban tech-savvy population. Internet of Things (IoT) is now also moving on to tackle the supply side, widely transforming the agricultural scene.

From solutions for small-scale farming households to large farms, the use of technology has helped farmers and agriculturalists minimize their farming effort while maintaining the optimal growth conditions of the plants.

In Vietnam, Cau Dat Farm is one of the farms using IoT in its agricultural system. The farm in Dalat currently has an underrunning IoT solution deploying a gateway to collect data such as light, humidity etc. through a system of sensors, weather stations, and robots, as to enable the management of farm operations via the cloud.

To accomplish this, the farm tech has formed a partnership with Intel in terms of importing its expertise and hardware from the inception of businesses, as well as incorporating other international hardware supplies and knowledge from agribusiness experts.

Also, understanding the operations and business strategy of Cau Dat Farm, it seems that the Vietnamese farmstead is establishing a connection between farmers through transferring the technology to other enablers.

This is because operators believe that Cao Dat Farm alone cannot cover the country’s demand for food. Hence, the key to the strategy instead is to manage the entire network through ensuring the quality, and transparency of the products made by its partners.

“Cau Dat Farm will be a platform for other agribusiness players to join, and all will produce quality goods,” Pham Ngoc Anh Tung, the director of Cau Dat Farm said.

Tung, which had a technology background in automation, was assured that joining Dinh Anh Huan’s Seedcom – one of the biggest success stories in Vietnam is positive that the application of IoT in agriculture will be robust.

Yes. Indeed it is.

Sellers in street market selling fresh organic fruits and vegetables

Sellers in street market selling fresh organic fruits and vegetables

As aside from Cau Dat Farm, smart farming has been apparent in Vietnam with its primary movers being Captii Ventures-backed MimosaTEK, which provides real-time solutions to optimize farm operation and Tech mogul FPT Corporation, which has also partnered with Japanese IT equipment and service firm Fujitsu in a smart agriculture project in Hanoi.

But what sets Cau Dat Farm apart from its competitors is that the company is also looking to work with local telecommunication platforms which have already developed their IoT platforms. In this sense, Cau Dat Farm will build a standardized database for agriculture, which is not yet available in Vietnam.

“Once these agriculture data becomes big enough, we will be able to solve the questions of forecasting crops, diseases, and productivity. It will also help connect the value chain together, including farmers, agribusiness companies, retailers, experts, and users.” Pham Ngoc Anh Tung, director of Cau Dat Farm adds.

This is because IoT (Internet of Things) can ensure transparency of food production without amplifying the costs, at a time when the country is highly concerned about food safety. Especially with the rampant cases of food safety violations – a recent case being the mass poisoning of 34 Japanese students who visited a Five-star Hotel in Ho Chi Minh city last month.

Considering the final effect, smart farming has a bright future in Vietnam as compared to traditional forms of cultivation. As despite the growing investment in clean products with high technology that might be more time-consuming as well as taxing in price.

But the products of technology – ready-to-eat tomatoes and lettuce, grown without soil that can be consumed unwashed are filling the gap for Vietnamese that are worried about food safety. They are going organic and looking for a healthy and reasonably priced choice – which make this profitable in the long run.

For more information, please visit http://caudatfarm.com/

By Vivian Foo, Unicorn Media

DBS, Bank Of Singapore Seize Opportunities For More Acquisitions In Asian Wealth Mission

It is an all most familiar pattern, as Singapore banking enterprises have been picking up assets and acquiring wealth management and retail banking arms of foreign players that have retreated the rough terrain of the Singapore market.

But as much as Singapore banks are locked in a race to expand their wealth management businesses, they are also competing with larger Western rivals such as UBS Group AG. Furthermore, Singapore banks also have to keep up with the city-state financial ambitions of being the key financial hub in Asia.

In this scenario, Keith Pogson, a senior partner for financial services at Ernst & Young said, “You either bulk up or you go niche. For the banks here in Singapore, the obvious choice is to bulk up.”

But even among local banks, DBS Bank and Bank of Singapore are the most intense to ramp up on its offerings. As the two banks combined have already announced at least US$400 million worth of acquisitions for the year 2016 alone.

Bringing an update on their most recent purchase, OCBC who wholly owns Bank of Singapore has completed its purchase of Britain’s Barclays Pic’s wealth-management units in Singapore and Hong Kong on Monday for S$ 324.5 million (about US$227.5 million) while DBS has announced last month that it will buy Asian retail and wealth businesses from Australia and New Zealand (ANZ) Banking Group Ltd’s wealth businesses in five Asian countries for about US$110 million.

Bank Of Singapore

Bank Of Singapore

A brief introduction on the two Singaporean banks:

Bank Of Singapore
Bank of Singapore (BoS) was formed in 2010 from the combination of the former ING Asia Private Bank business and OCBC Private Banking business. It grew its starting asset under management of US$22 billion to US$62 billion in September 2016, riding on its strong investment capabilities as well as wealth planning and premium advisory services supported by one of the largest research teams in Asia. Operating as one of OCBC’s private banking arm, Bank of Singapore, had $68 billion worth of assets under management at the end of 2015.

DBS Bank
Established on July 16, 1968, by the Government of Singapore to take over the industrial financing activities from the Economic Development Board, DBS since then has grown to become one of the largest bank in SouthEast Asia by assets. At the end of 2015, the private bank had S$97 billion (about US$70 billion) of assets belonging to high net worth clients.

Further Consolidation In Asian Wealth Scene
Both DBS Group Holdings Ltd. and Bank of Singapore, Asia’s largest homegrown private bank, are considering more acquisitions as they intend to expand their foothold onto a larger slice of Asian wealth market share, consisting of businesses from the region’s growing number of successful millionaires.

The two banks are looking to intensify its focus on capitalizing the growing wealth in Asia, which will allow them to offset the drag on interest income by lowering global interest rates.

Bank of Singapore, the Oversea-Chinese Banking Corp.’s private-banking arm said that it will definitely evaluate any opportunities. While the DBS acquisition criteria were also revealed in a Bloomberg Interview to be any deals that plays to DBS strength, fitting with the company’s strategy and reasonably priced.

Tan Su Shan

Tan Su Shan

“We look at deals if it fits in with our overall strategy and there’s price discipline and we have both the bandwidth and the operational expertise to do so,” the Singaporean Bank’s consumer and wealth head, Tan Su Shan told Bloomberg Television’s Haslinda Amin on Tuesday.

Obstacles For Foreign Players
Some may question why are these foreign players dropping out of the game in spite of the fast pace growth in Asia’s private wealth scene. Slimmer margins amid rising costs, complex regulatory compliance and mounting pressure for higher returns are among their reasons for leaving as they are unable to achieve the scale needed to be quickly profitable.

Nonetheless, this makes it a great time for Singapore banks to snap up these assets, to build the scale needed to overcome the same challenges without additional burden. Furthermore, these consolidations will help gain a competitive advantage and scale to work in this wealth business environment.

As seen with the move on ANZ Banking Group, DBC has added about 1.3 million people to its client list, including about 100,000 deemed affluent or private wealth customers. Similarly, the Barclays deals have also enlarged the firm assets under management to be more than US$75 billion. This has also made it closer to DBS, which has ranked fifth in Private Banker International’s annual survey of Asia-Pacific Banks, with $79 billion of high-net-worth client assets.

ABN Amro Group: DBS Next Possible Acquisition
On a similar note, DBS Group Holdings Ltd. is among the companies which are considering bids for ABN Amro Group NV’s private-banking business in Asia, alongside with Julius Baer Group Ltd. and LGT Bank that have similarly expressed interests in the ABN Amro Unit.

According to a 2015 ranking by Asian Private Banker, ABN Amro is the 18th-largest private bank in Asia, with $19 billion of assets under management in the region. Sources also told that this deal could potentially fetch more than US$300 million, would most likely be anounced by year-end.

Tan Su Shan did not comment directly regarding this matter.

The Way Forward
Thus, the race is on for Singapore banks to acquire and compete for the largest wealth acquisition which will give it a leg up from its competitors. That is not only on the local level, but the acquisitions come at an opportune time for the Asia Pacific to overtake the Western Europe to become the second wealthiest region in 2017.

Nonetheless, for local banks, the challenge also exis post-acquisition as they have to keep an eye out on the integration of the new assets, and retaining clients. But unlike DBS and BoS, UOB has not pursued acquisitions to expand its private bank, leaving it smaller than those of its two rivals.

By Vivian Foo, Unicorn Media

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