ADB to invest US$25 million in SME-focused PE fund Exacta II

Tue Oct 23, 2018 - 12:15pm UTC

23/10/2018 – Exacta Asia Investment II L.P., a PE fund managed by Exacta Capital Partners, has received a US$25 million investment from Manila-headquartered Asian Development Bank (ADB) to provide capital funding to SMEs in Southeast Asia.

This news comes as ADB announces a new long-term Strategy 2030 to support the expansion of the bank’s private sector operation.

“Investing in Exacta II allows ADB to participate in Southeast Asia’s continued economic growth while providing developmental benefits to people in the subregion,” said Janette Hall, ADB’s Director for private sector investment funds and special initiatives division.

For Exacta, the investment will allow the fund to invest growth equity into smaller firms in ASEAN, including the Philippines, Singapore, Malaysia, Indonesia, Thailand, and Vietnam whose growth is primarily driven by domestic consumption and export.

“This will help address the issue of low private equity penetration in Southeast Asia, which is crucial to create new jobs, drive economic growth, and encourage further investment in related sectors,” Hall added.

Established in September 2017, Exacta II is a PE fund with a target capitalization of US$250 million. It aims to invest about US$10 million to US$40 million per transaction in some of Southeast Asia’s SMEs and lower-middle market companies that engages in manufacturing, tech, and service industry.

Like the Mizuho ASEAN PE fund set up in March 2013, Exacta II aims to achieve favorable financial returns through investments in ASEAN region businesses as well as to enhance investment outcomes by promoting capital tie-ups and business partnerships between Japanese and investee companies.

The fund adopts a framework that assesses the environmental and social impacts of investee companies in order to enhance investment return and risk mitigation on a long-term basis.

In July 2018, ADB has made a US$10 million investment in DCDC Health Services to support the establishment of healthcare infrastructure in India and Sri Lanka.

According to ADB, the financing will also include a US$5 million equity investment made on behalf of Leading Asia’s Private Infrastructure Fund, one of ADB’s co-financing vehicles dedicated to private sector infrastructure in Asia and the Pacific.

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