OCBC Bank and its asset management subsidiary Lion Global Investors announced the close of a new private equity fund that will invest in small and medium-sized companies in Singapore, Malaysia, Indonesia and China for institutional investors and high net worth individuals.

 

The private equity fund, Lion-OCBC Capital Asia Fund I, marks the first time OCBC Bank, through its private equity investment unit Mezzanine Capital Unit has created a private equity fund with external investor participation.

 

What started out as a S$400 million (US$285.5 million) fund was upsized by almost 40% to S$550 million due to strong demand from investors. Investors were attracted by OCBC Bank’s strong reputation and its regional on-the-ground presence supporting the fund, the bank says in a statement. It took nine months to secure investor subscription after the fund was launched in late November 2014 – a fund of this size would typically take more than a year to close.

 

The fund, which targets high-growth SMEs in four core markets of Singapore, Malaysia, Indonesia and China, will benefit from MCU’s established track record of identifying and executing high-value investments in these markets. In addition, OCBC Bank’s extensive presence and large client base in each market give the fund access to a ready pool of SMEs to invest in. Investor confidence in the fund was boosted by OCBC Bank’s local knowledge and market insights into these countries, as well as the SMEs operating in them.

 

Daniel Kwan, head of MCU, OCBC Bank, says, “We introduced this fund to meet growing interest in alternative assets from our market partners and high net worth customers in Bank of Singapore. Investors in the fund were attracted by the superior returns that MCU has consistently delivered for OCBC of more than 20% internal rate of return in the past six years as its private equity unit, as well as by the fund’s unique positioning as a bank-sponsored investment fund.

“Our track record of delivering good returns to OCBC speaks to our ability to identify and execute deals over a wide range of industries in our core markets of Singapore, Malaysia, Indonesia and China. We are optimistic that we will similarly be able to deliver a strong portfolio of investments through the Lion-OCBC Capital Asia Fund I.”

 

Gerard Lee, chief executive officer of Lion Global Investors, adds, “In recent years, alternative investments have found a growing audience among investors seeking alpha solutions in an uncertain global economic environment. Hence, we are delighted to combine Lion Global’s Asian investment expertise with OCBC Bank’s market expertise to deliver a successful private equity product. The fund will open doors for Lion Global to reach out to investors who have shown increasing interest in alternative strategies.”

 

Among the fund’s investors were insurance companies, regional banks, sovereign wealth funds and high net worth individuals, including customers of OCBC Bank’s private banking subsidiary, Bank of Singapore.