Singaporean state investor Temasek Holdings and Southeast Asia's largest bank DBS Group will jointly launch a $500 million (Rs 3,720 crore) debt financing platform to focus on growth stage tech-enabled companies in Asia.
Headquartered in Singapore, the growth stage debt financing platform called EvolutionX Debt Capital “will provide non-dilutive financing with a focus on China, India, and Southeast Asia”, a joint statement by DBS and Temasek said.
“The growth debt capital space presents a significant opportunity, and EvolutionX will invest in opportunities arising from an increasingly digital economy – across sectors such as financial services, consumer, healthcare, education and industrial development – to accelerate growth and build the next generation of technology leaders,” it added.
“The investment in EvolutionX provides an opportunity for us to play an integral role in nurturing and financing the growth of Asia’s future unicorns, while forging partnerships and ecosystem opportunities with these high-growth tech-enabled companies,” said Tan Su Shan, group head of institutional banking, DBS.
The platform will be led by joint interim CEOs -- Amit Sinha, group head of telecoms, media and technology, institutional banking group at DBS; and Aftab Mathur, director, investment (innovation) at Temasek -- before a full-time CEO is appointed in the next few months.
Temasek already has a joint venture with Singapore’s United Overseas Bank providing debt financing to startups.
“Growth debt is fast emerging as an alternative source of financing for high-growth tech companies that traditionally only raised equity as a source of capital,” Su Shan said.
“Apart from helping founder entrepreneurs avoid dilution of share equity in the company’s initial stages of development, growth debt also serves as a complementary tool to tide these companies, which are often cash strapped, through unexpected market and economic headwinds by extending their cash runway,” Su Shan added.
The funding through EvolutionX will be for tech-focused growth companies in Asia that may face debt funding needs between the venture debt and late-stage debt financing phases.
In India, Temasek has seen its portfolio exposure rise to $14 billion in FY21 from $9 billion in FY20.
In an interaction with VCCircle recently, the top management at Temasek India spoke about valuations of tech companies as being not too expensive going by a futuristic view.
Mid-July VCCircle reported that Temasek has brought one of its hospital investments onto its new Indian healthcare platform.
Earlier this month, Temasek invested alongside Warburg Pincus in ride hailing cab aggregator Ola and D2C meat brand Licious. It also made two follow-on investments in the parent of PharmEasy over the last six months.