[15] Alta Views: your latest scoop of Private Capital Markets

Hi Alta-natives! In this edition, we look at how advisors are turning to alternative investments, the growing significance of ESG investing and the surge in foreign tech acquisitions made by Singaporean firms.

Advisors turning to alternative investments

• After a tough year for the stock and bond markets in 2022, some advisors are turning to alternative investments, according to a new survey from the Financial Planning Association.?
• Nearly 30% of advisors are actively investing in or seeking alternative investments, or “alternatives,” for clients, the findings show. These assets typically fall outside traditional investments in publicly traded stocks, bonds and cash.
• “Diversification” and “risk mitigation” were top objectives among advisors who recommend alternatives, according to the FPA survey.

Unwrapping the UBS-Credit Suisse merger

• On 12 June 2023, UBS officially completed the acquisition of Credit Suisse . Credit Suisse’s shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held. Leading to the acquisition, auditors found ‘material weaknesses in Credit Suisse’s? financial reporting
• Following this, Credit Suisse’s? largest shareholder – Saudi National Bank – ruled out further investment . Operating losses in Q4 2022 further exerted pressure on Credit Suisse’s? ability to fulfil Basel III CET1 capital ratio.?
• The key point of contention revolved around Swiss authorities FINMA's full-write down of Credit Suisse’s CHF16bn AT1 bonds – a contingent-convertible bond to support a bank’s capital upon falling below requirement. AT1 bonds are particularly popular amongst wealthy individuals in Asia due to their relatively higher returns and perceived lower risk of principal loss
• Traditionally, AT1 bonds are ranked more senior than common shares. However, FINMA asserted that the AT1 bonds rank lower than shareholders in the event of a restructuring. The contentious write down of Credit Suisse AT1 bonds have stirred class-action suits against FINMA to reinstate the largest loss for bondholders to date

ESG investing continues to evolve

• Preqin, the global leader in alternative assets data, tools, and insights, has released its annual environmental, social, and governance (ESG) report titled “ESG in Alternatives 2023.”
• The report highlights a remarkable three-fold increase in annual capital raised between 2020 and 2022, surging from $29 billion to $92 billion. Europe-based ESG funds emerge as the prominent frontrunners, securing over three-quarters (79%) of the aggregate capital, followed by 14% in North America and 7% in the APAC region.
• Moreover, average ESG fund sizes have grown from $400 million in 2017 to nearly $600 million in 2022, signaling increased investor appetite for sustainable investment opportunities.
• ESG considerations significantly influence investors’ willingness to engage in deals. In a recent investor survey conducted by Preqin, 29% of respondents reported turning down a deal due to ESG concerns, and an additional 43% expressed their likelihood of doing so. This suggests that investors view ESG as a vital means to manage downside risk.

Opportunities in Asia’s thriving Private Credit market

• Private credit would seem to be the hottest topic of the year in the Asian financial markets. Scarcely a week goes by without a senior financial executive proclaiming it to be a “golden moment” for private credit or a major investor increasing allocations to the asset class.
• In Asia, the rise of private credit is often seen as a fight for market share between banks and investment funds. That is understandable in a region where banks have traditionally been the primary source of credit for growing businesses, but it is also misleading.
• To put it simply: banks and private credit providers focus on different parts of the market. Where there is an overlap, they can still work together in a way that supports Asia’s economic growth and expands the overall market opportunity.

Singapore-based firms stepped up tech acquisitions

• The number of foreign tech acquisitions made by Singaporean firms, within Southeast Asia, witnessed a 166% surge from 12 in 2021 to 32 in 2022, according to the DealStreetAsia Data Vantage report "SE Asia Tech M&A Review 2023."
• About 62.5% of the targets were Indonesian companies, mainly from the fintech and financial services sectors, including banks, added the report, which analysed the M&A landscape in Southeast Asia between 2018 and May 2023.
• Singapore-based firms turned out to be the top foreign acquirers in 2022, ahead of US companies that dominated foreign acquisitions of the region’s tech companies in the last five years. By foreign, the report refers to acquisitions made in Southeast Asia, by entities based in a different country than the target firm.
• Acquisitions of Southeast Asian firms by US companies stood at 16 in 2022, the same as in the previous year.

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SwipeRx , Canva , Bibit , Finhay , Rainforest , discover who’s trending with our investor network! Researched by experts, voted by insiders. View our Top Picks here !

?? Notable Fundraises

Viu | US$300M | Strategic Partnership | Entertainment

Viu is a Hong Kong-based over-the-top (OTT) video streaming platform from PCCW Media Group. It streams across 16 markets across Asia, Africa and the Middle East with an estimated 66.5m monthly active users.

Amartha | US$100M | Debt | Financial Technology

Amartha is a peer-to-peer (P2P) lending platform based in Indonesia. The firm aims to bridge the gap between entrepreneurs and online potential lenders and enable SMEs to access microfinance loans. To date, they have disbursed over US$800m in loans to 1.6m businesses.

Sirclo | US$40.5M | Series C | E-Commerce

Sirclo is an Indonesian-based e-commerce solutions firm. Founded in 2013, Sirclo helps businesses set up online storefronts and offers a channel management service for brands to sell in other marketplaces. Sirclo currently serves more than 25 million customers with over 150,000 brands having used its platform.?

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About Alta Views

A fortnightly collection of the latest news from Private Capital Markets. Put together by Alta’s team of analysts, we bring you the most critical and timely pieces from private markets, to help you navigate the broad horizon. Stay tuned as we bring you the most notable fundraises, analysis on industries and companies trending within investor networks, the latest headlines, and more!

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About Alta

Alta is Southeast Asia’s largest digital marketplace for alternative investments. Alta gives investors direct access to invest and trade in a wide range of curated alternative assets, from direct investment into early to late-stage private companies, PE/VC funds, asset-backed securities of luxury assets, real estate, and more.

As a licensed integrated marketplace, Alta brings the trading and distribution of securities, fund management, and payment solutions under one roof. Through its blockchain-powered exchange, Alta is also able to support tokenization, digital custody, and trading of alternative assets.

Alta is headquartered in Singapore with global offices in Malaysia, Indonesia and India.

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