Singapore’s United Overseas Bank and Japanese Orix Corporation have launched a mezzanine fund targeting $200 million to invest in Southeast Asian companies, according to a statement.
The two firms have committed a combined $100 million to the United Orient Capital Fund, with the remaining $100 million to be raised from external Asia-based institutional investors.
The fund will invest in mid-sized companies through the provision of loans or the purchase of bonds and preference shares. It is targeting companies with mature operations, strong cash flows and good management teams.
The investments will be used to finance corporate expansion and corporate restructuring activities such as recapitalisation, M&A, as well as privatisations.
“Southeast Asia's fast-growing companies are seeking capital to help them tap the opportunities arising from the two megatrends in the region – increased consumer spending and intra-regional trade,” Terence Ong, director of the fund and UOB's head of global markets and investment management, said.
“The Fund will provide these companies with an alternative source of financing to help them to fulfill their expansion ambitions and business development plans.”
This is the second initiative launched by Orix in as many months, the firm launching an Asia-focused climate private equity vehicle in August with the Asia Development Bank and Robeco Institutional Asset Management, Private Equity International reported earlier.
The founders invested $400 million in the venture, with the firm based in Hong Kong and managed by Robeco’s private equity team.
Kazuo Kojima, director and corporate executive vice president of ORIX, said that embracing rapid growth in Asian economies will continue to be the core component of ORIX's strategies going forward.