Temasek's Vertex closes record $420m South-east Asian fund

SINGAPORE (BLOOMBERG) - Vertex Venture Holdings, a unit of Singapore's Temasek Holdings, has closed its fourth South-east Asia and India fund at a record US$305 million (S$420 million).

The amount raised was a record for an early-stage investment vehicle in the region, underscoring growing interest in its start-up scene. The new fund of Vertex Ventures Southeast Asia and India - the first institution to back ride-hailing giant Grab - far exceeded its original target of US$230 million.

Vertex is among South-east Asia's best-performing VC firms. The first Vertex Ventures Southeast Asia and India fund had returned 19.1 per cent as of March, the second fund returned 24.3 per cent and the third 36.4 per cent, according to the firm. That's "what caused us to continue our relationship in the fourth fund with a larger commitment amount," Roque Velasco, managing partner of Galdana Ventures, said in a statement.

Investors are putting money into the region's venture firms to capitalize on opportunities beyond the US and China, the primary focus of deals in recent years. Given the slowdown in China, they are focusing on outfits with strong track records internationally, said Alex Schmitz, managing partner and head of Asia Pacific at Capstone Partners, which helped with fundraising for Vertex's new fund.

"Many VC players in the region are raising money but none of them has the global platform like Vertex," said Mr Schmitz.

Vertex Ventures Southeast Asia and India has made 40 investments so far, including in Instarem and Validus Capital. The company plans to continue investing in Series A-stage start-ups in enterprise technology, fintech and consumer internet. It's one of six major funds in Vertex's global network, each of which is independently managed and raises most of their capital externally, though Vertex Holdings is an anchor investor. Just this week, another of the funds announced it had raised more funds than targeted.

Vertex Holdings is in turn a wholly-owned unit of Singaporean state investment firm Temasek.

"We could have easily raised a larger fund, but we felt it was a sufficient size for an early-stage fund like us," said Chua Kee Lock, managing partner of Vertex Ventures Southeast Asia and India. "At the end of the day, it's about generating real cash returns to investors."