Singapore’s OCBC PE unit to return with larger fund

OCBC Bank’s mezzanine capital unit and subsidiary Lion Global expect increased investor interest from Korea, Japan and China for its second fund targeting around $360m.

OCBC Bank’s private equity arm Mezzanine Capital Unit  and asset management subsidiary Lion Global Investors are set to hit the fundraising trail by the first half of 2019 with a second and larger fund, Private Equity International has learned.

OCBC’s MCU and Lion Global will seek about S$500 million ($360 million; €320 million) for Lion-OCBC Capital Asia Fund II, which is S$100 million more than the original target of its predecessor, said Daniel Kwan, global head of MCU at OCBC Bank. The firm’s private equity and special opportunities arm has not yet set a hard-cap for Fund II.

The firm raised S$550 million for its debut fund in 2015 after initially targeting S$400 million.

Kwan added that unlike Fund I, which OCBC Bank anchored with a S$200 million commitment, Fund II will have less bank capital and more third-party investors.

He noted that the firm’s existing LPs, who are mainly Asian institutional investors and high-net-worth individuals, are supportive of the next capital raise. The firm will also tap investors from China, Taiwan and Korea, and is in discussions with Korean corporates and funds of funds, he added.

Fund II will have the same strategy as Fund I, targeting high-growth small and medium enterprises in Singapore, Malaysia, Indonesia and China. Since wrapping up fundraising for its debut fund almost three years ago, Lion Global has completed 12 deals across these markets. The largest deals include Chinese offline marketing agency Guangdong Brandmax Marketing, a Jakarta-based ride hailing and logistics platform and a Shenzhen-headquartered drone manufacturer.

Fund I is expected to be substantially deployed by 2018, with another two deals slated to be completed by the end of the year. The firm expects an internal rate of return in the high-teens and a 2x money multiple, Kwan said.