ShawKwei closes fourth and largest fund on $812m

ShawKwei Asia Value Fund 2017 is almost double the size of its predecessor and raised more co-investment capital from LPs than the firm’s previous vehicles.

ShawKwei & Partners, a Hong Kong-based mid-market firm, has hit the final close on its fourth fund on $812 million, against an original target of $800 million.

Capital raised for ShawKwei Asia Value Fund (SAVF) 2017 includes both committed and co-investment capital, Kyle Shaw, ShawKwei’s managing director, told Private Equity International. He declined to disclose further details.

Shaw noted LPs were more focused on co-investments in SAVF 2017 than the previous fund, the 2010-vintage, $450 million Asia Value Investment Fund III.

SAVF also received commitments from new investors such as US and European family offices, Shaw added.

The firm began fundraising for SAVF in May 2017 with a target of $800 million.

Capital raised from the fund will follow the same investment strategy of backing mid-market buyouts in manufacturing, industrial, and service companies operating across China, South Korea, Taiwan, Hong Kong, Thailand, Malaysia and Singapore. The firm’s investments range from $50 million to $100 million in size.

ShawKwei sealed its first deal from Fund IV in March 2018, a $52 million investment in the oil and gas services and equipment company Gaylin. The company was recently merged with Amos, a Singapore-based marine logistics firm, which ShawKwei bought for $17 million in 2014.

On the scope for mid-market buyouts in Asia, Shaw said: “There are a lot more opportunities to take control of companies – management is older, there is often no succession plan, industries are increasingly challenging, and companies need more investment, but owners don’t want to do it.”

The firm has also been looking closely at investing in South-East Asia, Taiwan and South Korea for manufacturing deals, because of the tariffs in China, he added.

“Over the past 20 years China has taken an increasing share of investment for new manufacturing, crowding out other locations in Asia and abroad,” Shaw explained. “Going forward, there likely will be more advanced manufacturing business future opportunities in South Korea, Taiwan, Singapore, Malaysia, and Thailand due to ever rising costs of operating in China. Certainly the US tariffs further exacerbate the high costs in China.”

ShawKwei has over $1 billion in assets under management.  The firm has offices in Hong Kong, Shanghai and Singapore.