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(Bloomberg) — Temple Water, an alternative investment firm co-founded by a former Deutsche Bank AG banker, is seeking up to $800 million for two funds in Asia, a “challenging” market where it has been raising money for nearly a decade. It’s low.
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Cliff Chan, who founded the company in 2018 from British-South African banking and wealth management group Investec Group, said the new fund will target mid-sized companies and clean energy technology companies in Asia. The $1.7 billion asset management firm begins raising between $400 million and $500 million for its second private equity fund, doubling its previous capital and expanding into a decarbonization fund. It is seeking $300 million, Zhang said in an interview.
Temple Water is bracing for the most difficult funding environment in Asia in at least a decade. Pension funds and major backers are maxing out their allocations, particularly to private equity firms in Asia. This is because funds are slow to return money to investors. The company is betting that an expected 65% capital distribution from the first fund by the end of this year will persuade existing backers and new investors to join the second fund. said Mr. Zhang.
“We believe that true opportunity often emerges in the midst of adversity,” Chan said. “We are raising capital now to seize the opportunity to invest in innovative businesses poised for growth as the world emerges from recent upheavals.”
He said the Hong Kong-based fund has so far returned 14% of its capital to investors. After leaving Deutsche Bank’s corporate finance division in 2013, Zhang was appointed senior vice president of Chow Tai Fook Enterprises, a privately owned conglomerate run by billionaire Henry Chen. The Harvard graduate also worked at HSBC Holdings Plc.
Zhang said the company is aiming to raise funds from institutional investors and high-net-worth individuals in Asia and the Middle East. Temple Water’s initial $200 million fund raise in 2019 was delayed until December 2021 due to Hong Kong protests and the pandemic. The fund made no investments in 2022 as rising interest rates and volatile markets put a damper on investment activity.
According to Preqin Ltd., private equity funding in China has declined significantly, with companies in the region raising only 22% of the previous year’s total in the first half of 2023. As of August, just nine funds in the region had closed, raising a combined $2.7 billion, the lowest number of closures in a decade, according to PitchBook data.
Temple Water’s decarbonization fund has already secured commitments from Hong Kong-listed gas equipment maker CIMC Enric Holdings and Canadian fuel cell maker Ballard Power Systems. The fund invests in global technology companies in the hydrogen value chain and energy storage. and carbon capture. The new private equity pool will focus on healthcare, mobility, essential services and precision manufacturing in Asia. Last year, the company acquired 51% of Luye Medicals Group Pte’s oncology and cardiology business in Singapore.
The Decarbonization Fund is targeted at investors seeking to comply with sustainable finance regulations imposed by the European Union, and aims to help companies move beyond just considering sustainability risks to how they support environmental and social goals through their investments. The government is requesting disclosure regarding the extent to which it is promoting these activities.
Temple Water has developed Hong Kong’s first hydrogen refueling station and first hydrogen double-decker bus. Last week, the company signed an agreement with Abu Dhabi to develop a range of green solutions, including the development of solar power plants, hydrogen refueling stations and the management of a fleet of battery and fuel cell electric buses. Its portfolio company Wisdom Motor delivered the UAE’s first hydrogen bus at last year’s COP28 climate change summit.
Investec spun off its Asia principal investment arm in 2021. Templewater is his Investec’s exclusive private equity investment arm in Asia excluding India.
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