Singapore’s EDBI scouts for start-up targets in India and China
EDBI, the investment arm of the Singapore’s Economic Development Board, is looking to make a foray into India’s startup scene at the same time as expanding its presence in China.
And although EDBI prefers to be a direct investor in growth-stage companies, the asset owner sees strong advantages in venturing into new markets via fund-of-funds managers, Basil Lui, managing partner and investments head for healthcare and emerging technology at EDBI, said on stage at AsianInvestor’s 12th Southeast Asia Institutional Investment Forum in Singapore on November 22.
“One of the latest trends we're looking at is India where there is quite a lot of fund (activity) going on there. We are not too familiar with the Indian market, so we are looking at any interesting India-focused funds,” Lui said.
He said that EDBI selectively invests in funds mostly as a multiplier but also as a way of tech-sensing potential new direct investments. This approach was also how the asset owner entered China, he explained.
The general strategy with these fund investments, he said, is to establish attractive co-investment terms that could help introduce interesting companies to EDBI for co-investments alongside the fund.
“In China, there is a huge market which our fund investments have opened our eyes to. Similarly, I hope when we engage funds focusing on India it will be a revelation to us,” Lui said.
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While China has now become more familiar with investors, funds were still showing their value in certain sectors, according to Luo, especially within healthcare and semiconductor companies.
“We look at the development within the global semiconductor sector and China focusing on all things related to (micro)chips. If it hadn’t been for our Chinese fund investments, we wouldn’t have known that certain interesting companies exist. The same with healthcare where China is pretty up there when it comes to biotech and their own ways of doing healthtech,” Lui said.
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ARBITRAGE PLAY
Healthtech is any hardware or software technology related to assessing, restoring, preserving or improving mental or physical health, wellness and quality of life. Medtech, or medical technology, meanwhile, is a subset of this technology space which has to comply with stricter regulations and has a demonstrated clinical validity.
With an emphasis on healthcare and the underlying trend of the future of health, EDBI is looking for startups related to digital health, medtech and healthcare services - and its target is Southeast Asia where successful business models and practices in the healthcare industry are emerging, says Lui.
“There will be a lot of upsides, and it could even be an arbitrage play where multiples for healthcare companies in this region is lower than what you see in Europe and US, and even in China where the multiples are higher,” Lui said.
Therefore, EDBI sees a potential in identifying companies focusing on Southeast Asia as a growth area, but might be listed in other areas, leading to an arbitrage of multiples.
“We are also looking at interesting, credible healthcare funds focusing on Southeast Asia as a growth region but with a global mindset so we can do that arbitrage,” Lui said.
To seek out the right investments, EDBI also has offices near Silicon Valley in California and Shanghai.