Crest Capital Asia – Company Profile

Mezzanine financing company overview

Mezzanine firm logo:

Crest Capital Asia - mezzanine financing company logo

Headquarters location:

Singapore

Typical mezzanine financing range:

US$3 million to US$50 million

Geographic focus:

China and ASEAN

Industry focus:

Industry agnostic

Company profile

Listed in the following regions:

Asia
Crest Capital Asia is a specialized alternative investment firm that focuses on investment opportunities around under-served, mid-capitalization regional enterprises. With mainly Asian institutional investors, government agencies and family offices as clients, they identify and pursue investment opportunities in the region with proven business models and, in particular, those which had built intellectual properties or proprietary franchises.

As best-of-breed fund manager, it is their mission to provide investor-clients with market savvy and differentiated investment models to harness funding into these mid-cap enterprise opportunities. The objective is to realize investment gains by using entrusted funds to catalyze enterprise value enhancements in investees and ultimately crystallize these as investment gains for the investor-clients.

Since 1987, Crest Capital’s team members had successfully supported more than 30 initial public offerings and M&A exercises from India, ASEAN countries, China, Taiwan and South Korea. Currently, they have their network of offices in Jakarta, Shanghai and Singapore and affiliated firms in Japan, the Middle East and the them.

Crest Capital Asia Background

Crest Capital Partners was founded by Mr. Peter Chan in 2004 to take over a private equity fund (“Baring Communications Equity Asia-Pacific Pte Ltd”) which he set up earlier for the ING Group and led as Managing Director since 1996. Peter subsequently restructured the business under Crest Capital Asia (“Crest”) and new fund management mandates are originated whilst activities of Crest Capital Partners are being wound down. The firm now stands as an established boutique regional alternative investing firm that specializes in the small to medium capitalization enterprise businesses. They focus on proven entrepreneur-managed businesses in China and the ASEAN countries and especially those with intellectual properties, knowledge assets or monetizable franchises.

Since 1987, team members successfully led or supported over 30 regional initial public offerings and M&As in Singapore, Malaysia, Thailand, Indonesia, the Philippines, China, Taiwan, South Korea and India. The firm have offices located in Jakarta, Shanghai and Singapore. Their investors include Government funds, financial institutions, corporations, family offices and high net worth individuals.

The firm’s mission is to originate innovative and differentiated investment strategies to set themselves apart by offering their investors customized knowledge-driven fund products rather than commoditized products fashioned by market fads and themes. In doing so, they strive to serve the interests of their 3 stakeholder groups with integrity and honor:

  • Investors: To deliver an optimal return by pursuing relatively lower risk investment opportunities over a 5- to 6 year-period. Given the frequency of global market volatility, they endeavor to impute a “wet weather protection” strategy within all investing strategies to protect investor’s capital to a higher degree. This is critical as most of its investor clients are astute and conservative.
  • Human Resources: As a professional service organization, to provide learning and career development to ensure optimal performance and incentivization of their human capital in executing investment mandates.
  • Investee Partners: Leveraging on their knowledge of enterprise markets and financial expertise to provide win-win synergistic funding solutions to complement entrepreneur business partners so that they benefit from enterprise value enhancement whilst their investments are rewarded with financial returns.

The firm’s business models include fund management services and fund operations’ start-up services for government agencies, conglomerates and institutions.

The firm believes that three critical factors that drive Crest Capital Asia’s success are:

Continuing innovation – Crest Capital Asia strives to innovate market-responsive and creative alternative investing strategies to institutional fund management based on traditional private equity methodology. They avoid commoditized investing strategies in order to provide their investors with value added investing propositions that are not price-competition driven. Furthermore, they co-exploite business opportunities with the entrepreneur-partners they fund. This is a strength built on the extensive years of experience in the Asian markets coupled with team members’ focus on SME investing since 1987.

Crisis discipline – The lessons gained by senior management in managing previous funds across multiple global and regional economic and financial crises will always be etched into the investing strategies of Crest’s funds. This builds a vigilant discipline in their approach to fund management that good times will not last and, for instance, their emphasis is always on picking defensive businesses for investment, investing at value, structuring deals for worst case scenarios and monitoring investee cash flows closely.

Human capital – The firm is as solid as the people they have and thus they engage in an ongoing talent recruitment plan as well as ensuring their human resources are given proper incentivization and career development prospects. At the same time, professional conduct and ethics such as integrity, transparency, objectivity and avoiding conflicts, etc are upheld and ingrained on the job.

Benefits to investee companies

With their strategy, the firm systematically scouts for fundamentally sound business opportunities with sustainable operating cash flows and invests in these with proven entrepreneur-partners. Through this process, Crest Capital Asia shares their strengths with the investee companies in the following areas:

  • BRANDING – Crest Capital’s equity participation provides strong endorsement and confidence in their stakeholders.
  • CAPITAL MARKET ACCESS – With more than 20 years of corporate finance experience, they have the expertise and resources to prepare companies for IPOs, M&As or any customized financial restructuring.
  • STRATEGIC AND OPERATIONAL EXPERIENCE – Crest team members’ extensive experience allows them to fully appreciate the value strategies of prospective investees.
  • GLOBAL NETWORKS – Over the years, they have established a global network of partners including numerous portfolio companies, professional advisors, strategic and financial partners with whom they can support their investees business development.

Investment philosophy/criteria

Crest seeks investment opportunities across a variety of scenarios such as:

  • PRIVATE-TO-PUBLIC CROSSOVERS – The transition of privately-held enterprises to publicly listed status is a common hunting ground for private equity funds investing for the value arbitrage between the two statuses. The firm’s management team members are veterans employing funds into this situation since the 1980s when they led IPOs in Singapore, Thailand, Indonesia and the Philippines back then when they pioneered this investment model. However, they do not pursue these “pre-IPO” deals as mainstream activity now as this area is crowded with many new funds and is therefore, subject to intense price competition.
  • INDUSTRY OR MARKET FLUX – When established industries or markets are dislodged due to regulatory changes, crises or any exogenous events that do not impair its intrinsic value, situations of interim market imperfections are precipitated. For instance, Crest team members had taken advantage of such a situation in the Taiwanese cable TV market in the late 1990s. These situations are top investment priorities for Crest.
  • OWNERSHIP TRANSITIONS – They structure and participate in buyouts for business owners who require liquidity or lack effective succession plans. This allows Crest to invest and lead the corporatization of the firm whilst retaining the founder entrepreneur’s dynamism and drive and build exceptional value through the process. Recently, they funded such a transaction involving one of ASEAN’s top children beverage companies.
  • PUBLIC LISTED COMPANIES / SPECIAL SITUATIONS – Listed companies can become entangled in value diminishing events over time. A fresh injection of new management perspective or business models together with funding may be required to give such companies the means to constantly adapt and rationalize to optimize enterprise value. Investment into such PIPE (“Private Investments in Public Equity”) situations is also an area of keen interest for them. Example of their deals here are listed real estate and oil and gas companies in their corporate refinancing or recapitalization exercises.
  • DISTRESSED OWNERS – Another investment situation is where they can acquire assets or businesses from sellers who are under distressed conditions. For example, they acquired 85% of an operating business in 2007 from a seller under such conditions and where the business suffered a case of funds misappropriation.
  • OUT-OF-THE-BOX SITUATIONS – The firm’s fund management principle is to seek situations requiring capital infusion especially when there are no other fund providers available.
  • VALUE ENHANCEMENT PLAN (VEP) – At Crest, VEPs form an integral part of their investment programs and they incorporate two essential ingredients- Corporatization Exercises and Technology Augmentation.
    • CORPORATIZATION EXERCISES – Traditional companies are transformed through their adoption of global best practices that in turn provides them with greater access to capital market resources. Some of these improvements include:
      • Enhancing corporate governance to listed company standards
      • Streamlining management information systems to improve transparency and accountability in line with international standards
      • Professional recruitment and remuneration plans
      • Corporate succession planning
      • Preparation for post-IPO investor communications
    • TECHNOLOGY APPLICATIONS – Firms are reconfigured to integrate new technologies in a cost-effective way to fortify competitive advantages. This process includes:
      • Identifying targets that derive significant benefits from technology applications
      • Formulating and executing technology-augmented strategies that allow these firms to project their domain expertise into new product lines or markets
      • Brand building and intellectual property monetization
      • Recruiting tech-savvy professionals
      • Forging strategic technology alliances that are specially structured for commercial success
      • Cost improvement exercises through process streamlining and technology incorporation

As an institutional investor, they are proactively on the lookout for investment partnerships with entrepreneurs or management teams who are transparent, ethical and who are keen to build partnerships based on performance driven strategies. With their extensive experience of working with regional entrepreneurs and management groups from India, Sri Lanka, ASEAN, China, Taiwan and South Korea since the 1980s, their team members are well grounded with pro-business work ethos to support the Asia-based entrepreneur in building enterprise value..

The Value Monetization fund overview

This series of fund strategy focuses on seeking out investment opportunities of deep value across the 2 key Asian markets of China and ASEAN countries. It seeks to discover business opportunities in Asian enterprises driven by exceptional entrepreneurs building significant values with sustainable market propositions, intellectual properties and proprietary process know-how that endure economic down cycles.

Amidst this backdrop, their Value Monetization Funds (“VMF”) execute an active value structured finance approach to invest in lower-risk late stage investments in successful enterprises. VMF also pursues special situations where it can participate in listed companies, turnaround situations, mezzanine financing situations or restructuring enterprises undergoing value inflexion processes. In all cases, VMF invests with the traditional private equity discipline of active participation in investees. Generally, Asian enterprises operate amidst a host of market inefficiencies and thus present a field of value investing opportunities to the Fund.

VMF investment criteria include the following:

  • Investment range of US$3 million to US$50 million
  • China and ASEAN-based enterprises
  • Experienced and transparent management teams
  • Successful operating track record
  • Predictable cash flows
  • Pre-Agreed value enhancement and realization plans

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