Asia is leading all other emerging markets in perceived attractiveness for investment over the next year, according to the Emerging Markets Private Equity Association’s latest global LP survey.
In fact, the overall impact of the covid-19 pandemic on China and South-East Asia private capital deals as of June 2020 was limited, according to EMPEA half-year data: capital invested in South-East Asia surged 86 percent year-on-year, while in China it rose by 14 percent. EMPEA chief executive Cate Ambrose, and Julie Ruvolo, managing director of venture capital, share how and why the industry body is deepening its reach in Asia.
What are you focused on in Asia?
Julie Ruvolo: We are looking at two things in this vast world of tech and venture investments in emerging Asia: cross-border investment activity and the impact of technology.
We look at tech innovation in emerging markets as necessarily impactful. That impact can include aspects like financial inclusion, access to better credit, access to information and services. You can cut across any of the deal flow we track and see that – fintech and edtech businesses like Yuanfudao and Zuoyebang (China) and Vedantu and Byju’s (India) are raising billions of dollars to level the playing field in terms of access to online education.
From a data-driven perspective, given the geopolitical overhang on dealflow, we want to examine what effect it’s having on cross-border investment. We are hoping that regardless of what’s happening in the macro environment, there would be a beneficial effect, particularly for markets we would consider undercapitalised.
How does Asia’s tech scene differ from the West?
JR: Silicon Valley does not have a lock on deep tech, it’s emerging from increasing parts of the planet. If you look at deep tech innovation coming out of China – life sciences is a huge example – the amount of investment we are seeing in biosciences picked up in 2019 and has exploded in 2020. And applied tech can be just as (if not more) impactful in the markets it’s serving than deep tech. Tech innovation is a layer that is cutting through all aspects of our society and economy, not just the high-tech parts of it or for the wealthiest consumers.
How is EMPEA making headway in the region?
Cate Ambrose: We expect to expand our presence in Singapore – where we have had a representative since 2017 – to staff an office with a local research team, our first Asia outpost, in the first quarter of next year. In June Suyi Kim, head of Asia-Pacific at Canada Pension Plan Investment Board, joined EMPEA’s board of directors. Our Asia Council has met virtually twice this year, with institutional investors and fund managers including CITIC Capital, Asia Alternatives, KKR, Baring Private Equity Asia, Navis Capital Partners and Gaja Capital, among others, participating.
From a messaging or a mission perspective, we want to be at the table and as close to players in those markets, documenting and knowing what’s happening, and promoting engagement. EMPEA will be publishing a deal book of investment cases from across Asia, Africa, Latin America, MENA, and CEE/CIS early next year, which will be available across our platforms. The idea is to provide rigorous detailed examples of how private capital can contribute to high-quality job creation, environmental sustainability, social impact and transparent governance in emerging markets when it is done well.