Heliconia Capital Management, a unit of Temasek Holdings, has announced the launch of a S$600 million (about US$422 million) International Partnership Fund (IPF) in government capital.

The new fund will be used to co-invest with Singapore-based enterprises, helping local enterprises to internationalise their business operations and expanding into oversea markets via acquisitions.

Its joint investment policy focuses on Asian markets, encouraging local firms to partner with other Asian companies to engage in activities such as extending product lines, brands or value chains, in addition to gaining access to markets, channels, and technologies.

Specifically, the fund will support firms that intend to grow by acquiring their regional peers, but which may not have sufficient capital to proceed with its acquisition.

In this way, the fund will hold opportunities for smaller local firms by allowing them to link up with Heliconia as a consortium partner that is able to co-invest in the target company alongside the Singapore acquirer.

Heliconia will come in purely as a financial investor and will not compete over the acquisition’s ownership. Firms that have not identified an acquisition target can also opt for Heliconia’s help to source deals by tapping its extended networks, which only large private equity funds can maintain.

However, to draw on the funds, firms must meet the criteria of being headquartered in the city-state and to have post annual revenues no higher than S$800 million ($564 million). These conditions place their investment focus firmly on middle market enterprises.

“The creation of the fund is part of an effort to develop a smart financing ecosystem here, in Singapore,” said Finance Minister Heng Swee Keat. “More funding support is also being targeted at infrastructure developers to help them undertake more oversea projects.”

By Vivian Foo, Unicorn Media