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Asia’s Private Equity News Source avcj.com September 01 2015 Volume 28 Number 32
ANALYSIS FOCUS
The digital dynamicVenture capitalists seek out potential unicorns in mobile-mad Korea Page 7
Imbalance of powerKorea’s conglomerates are still top dog Page 12
Korea PE on the QTWhy the middle market likes a low profile Page 14
LPs risk growing pains as they boost exposure
Page 3
Anchorage, Blackstone, Brookfield, CITIC Capital, Denham, Global Brain, Go Scale, Gobi, I Squared, Intel Capital, JD Capital, Morrison, OCBC, Partners Group, PEP, Providence, Qiming, Vogo
Page 4
What is behind Korea’s biggest buyout deals?
Page 13
EDITOR’S VIEWPOINT
NEWS
ANALYSIS
PRE-CONFERENCE ISSUE AVCJ PRIVATE EQUITY AND VENTURE CAPITAL FORUM KOREA 2015
Formation 8’s Brian Koo on the rise of the Asian entrepreneur
Page 9
INDUSTRY Q&A
Unlocking liquidity for private equity investors
www.collercapital.com London, New York, Hong Kong
Anything is possible if you work with the right partner
Number 32 | Volume 28 | September 01 2015 | avcj.com 3
EDITOR’S [email protected]
KOREA’S LP COMMUNITY HAS BEEN compared to an iceberg: the tip is very visible but getting to the lump of uncommitted capital that lurks beneath surface can be far more difficult. GPs on the fundraising trail must ask themselves whether it is worth the time and effort targeting anything apart from the tip given the pay-off might not come for years.
An investors relations executive with a global private equity firm once told AVCJ there are around 150 investors in Asia actively making LP commitments to funds. About 90% of the capital he had raised in the region to that point came from the largest 5-10 players. While Korea Post might claim to space in the tip of the domestic LP universe, the National Pension Service (NPS) and Korea Investment Corporation (KIC) are usually the primary targets. And why wouldn’t they be?
NPS increased its alternatives allocation from 9.4% to 9.9% over the course of 2014 as total assets grew by 10.3% to reach KRW470 trillion ($435 billion). Of the KRW46.7 trillion in alternatives, KRW22.2 trillion was deployed domestically and KRW24.5 trillion globally – the first time the latter has accounted for the majority. It had a further KRW4.93 trillion in infrastructure and KRW12.2 trillion in real estate.
The pension fund only started its domestic alternative program in 2002 and first went offshore in 2005. By 2010, it was allocating 5.8% to the asset class and the target for 2014 was 11.3%, up from 10.6% the previous year. The significance of NPS is captured by its overall asset growth rather than the steady increase in its private equity allocation.
The fund is expected to exceed KRW500 trillion this year, KRW847 trillion in 2020 and KRW2.56 trillion in 2043. Assuming no change in the percentage allocation, the KRW46.7 trillion committed to alternatives at the end of 2014 would be more than KRW253 trillion by 2043.
KIC is in some respects even more ambitious. In a speech marking the 10th anniversary of the sovereign wealth fund’s formation in June,
the CEO drew comparisons to the approaches taken by Yale University and Canada Pension Plan Investment Board as he suggested that the alternatives allocation could reach 50%, a massive jump from the current 8%. It is expected to stand at 15% by the end of this year.
KIC had $84.7 billion in assets at the end of 2014, of which $6.8 billion was deployed in alternatives. It had $3.2 billion in private equity – up from $1.08 billion in 2012 – and then $1.9 billion in hedge funds and $1.5 billion in real estate. It began investing in the asset class are recently as 2009.
While these groups’ plans to deepen their exposure to private equity will certainly bring plenty of GPs to their door, expansion on this scale can be problematic. GP feedback on how NPS and KIC approach the asset class is generally positive – China Investment Corp. still tends to be the most readily criticized of the Asian sovereigns – but internal resources, unless supplemented, will come under pressure.
Any group deploying increasingly large sums must be careful in picking managers and minimize the risk of insufficient vintage diversification (and from a GP perspective, there is a danger that an LP that has invested heavily will suddenly cut back). If there is a co-investment or direct investment program on top of this, a small team would be even more stretched.
Finally, there is the issue of compensation. An expanding LP needs talented executives to offer direction, but if the salaries on offer are not competitive with market rates – at mid-level as well as senior level – recruitment will be difficult. Where groups have a deficit in terms of institutional memory, they should pay a premium to bring it in from outside.
Tim BurroughsManaging EditorAsian Venture Capital Journal
Cracking the Korean LP
Managing Editor Tim Burroughs (852) 3411 4909
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Staff Writer Holden Mann (852) 3411 4964
Creative Director Dicky Tang Designers
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avcj.com | September 01 2015 | Volume 28 | Number 324
AUSTRALASIA
PEP completes exit from SpotlessPacific Equity Partners (PEP) has completed its exit from Australian cleaning and catering contractor Spotless Group – which it privatized in 2012 and re-listed last year – through a A$374.3 million ($268.6 million) block trade. The private equity firm and all bar one of its co-investment partners sold their entire 18.9% stake. This follows two previous sell-downs in December 2014 and in March.
Anchorage agrees $150m Affinity Education dealAnchorage Capital Partners has agreed to buy Affinity Education for A$208.3 million ($150 million) after the Australian Securities Exchange-listed company spurned a rival offer from G8 Education. Affinity owns and operates 161 childcare centers nationwide and manages a further six facilities. It has a daily licensed capacity of 12,682 children and focuses on those aged six weeks to 12 years.
GREATER CHINA
Dalian Wanda buys Ironman from ProvidenceChinese conglomerate Dalian Wanda Group has agreed to buy World Triathlon Corporation (WTC), the leading global operator of Ironman events, from Providence Equity Partners for $650 million. WTC, which has been held by Providence since 2008, has a 91% market share in the long-distance triathlon market.
Food-ordering platform Ele.me raises $630mEle.me, a Chinese online food-ordering platform, has raised $630 million from new and existing investors. The investment reportedly values the business at more than $3 billion. CITIC Private Equity and retailer Beijing Hualian led the round. CMC Capital, Gopher Asset Management, Sequoia Capital, Tencent Holdings and JD.com also took part.
Tsinghua, Shengjing launch VC fund-of-fundsShengjing Group, a Chinese investment advisor, has partnered with Tsinghua Holdings to launch
a $300 million fund-of-funds to invest in venture capital overseas. The fund, Shengjing Overseas FoF 2016, will deploy most of the capital in funds managed by VC firms based in Israel and the US.
Shanghai Pharma establishes healthcare fundChinese drug maker Shanghai Pharmaceuticals Group has partnered with Shanghai Real Power Capital to launch a RMB3 billion ($469 million) healthcare-focused fund. The vehicle
has an initial target fund size of RMB1 billion, with Shanghai Pharma and Real Power each committing RMB250 million.
Partners Group’s Trimco buys A-Tex from PolarisTrimco, a Hong Kong-headquartered garment label manufacturer controlled by Partners Group, has agreed to buy industry peer A-Tex from Europe-based Polaris Private Equity. While Trimco has strong production and supply chain capabilities, as well as a sizeable customer portfolio, A-Tex is seen as a market leader in design-intensive solutions for fashion brand owners.
CGN PE, Morrison in first close on renewables fundJIDA Capital Partners, an investment arm of New Zealand’s HRL Morrison & Co, and Shenzhen-based CGN Private Equity have reached a first close of RMB1.87 billion ($292 million) on their China-focused renewable energy fund. The fund has an overall target of RMB5 billion.
Intel invests $60m in drone maker YuneecIntel Capital has committed more than $60 million in Yuneec International, a Chinese drone manufacturer. The company makes drones for consumer market as well as manned electric aircraft. More than one million units are produced each year.
JD plans reverse merger with Shanghai-listed firmChina’s JD Capital, formerly Jiuding Capital, is seeking to list on Shanghai’s main board through a reverse merger with publicly-traded property developer Jiangxi Zhong Jiang Real Estate. It plans to sell and inject its PE business into Jiangxi Zhong Jiang and then subscribe to shares issues by the listed entity through a private placement.
Good Resources backs Go Scale’s Lumileds dealGood Resources Holdings, a Hong Kong-listed investment firm controlled by Chinese billionaire Kinming Cheng, has agreed to contribute $93 million to the PE-led acquisition of Lumileds, the LED components and automotive lighting unit of Dutch electronics giant Philips. In April, a Chinese consortium led by Go Scale Capital announced it would buy an 80.1% stake in Lumileds in a deal worth $3.3 billion.
JD to acquire Ageas’ HK life insurance unitChinese private equity firm JD Capital has agreed to buy Ageas’ Hong Kong life insurance business for HK$10.68 billion ($1.38 billion). The sale comes as Europe-headquartered Ageas refocuses its Asian business on faster-growing emerging markets in the region.
It purchased a 50.45% stake in the Hong Kong business - then known as Pacific Century Insurance - in 2007, paying HK$3.5 billion in cash. Ageas then bought up the remaining shares, taking the total acquisition value to around
HK$6.94 billion. The book value of the Hong Kong operation – which posted gross inflows of EUR418 million in 2014 – amounted to EUR967 million ($1.01 billion) as of June.
JD Capital, formerly known as Jiuding Capital, was established in 2007 and rose to prominence in the renminbi fund space. It had RMB31 billion ($4.86 billion) in private equity funds under management at the end of last year. JD closed its second US dollar fund at $200 million last September, with commitments from the likes of Temasek Holdings, Allianz, and Partners Group.
The firm also has a brokerage unit, a mutual fund management firm, an overseas asset management business, a peer-to-peer lending platform, and a payment processing division. Last year, JD became the first Chinese PE firm to list on the country’s emerging over-the-counter (OTC) platform.
NEWS
Lexington Partners
Senior Secured Revolving Credit FacilityProvided to
$2,250,000,000
CO-LEAD ARRANGERSCitibank, N.A.
Wells Fargo Bank, N.A.
ADMINISTRATIVE AGENTCitibank, N.A.
LENDERS
State Street Bank, N.A.
Barclays Bank PLCCitizens Bank, N.A.
Comerica Bank, N.A.Deutsche Bank AG
Citibank, N.A.Wells Fargo Bank, N.A.Bank of America, N.A.
Lloyds Bank PLC
May 2015
Innovative Directions in Alternative Investing
This announcement appears as a matter of record only.
avcj.com | September 01 2015 | Volume 28 | Number 326
Drone start-up EHang gets $42m Series B roundGP Capital, a China-focused PE fund backed by Shanghai International Group, has led a $42 million Series B round of funding for EHang, a Chinese commercial drone manufacturer. GGV Capital, ZhenFund, Lebox Capital, OFC and PreAngle also took part in the round.
Qiming leads Series B for goods delivery appQiming Venture Partners has led a Series B round of funding for Linjia.me, a Chinese mobile app that offers last mile delivery services. Existing investor IDG Capital Partners also participated.
NORTH ASIA
Vogo buys lifestyle product maker BodyfriendVogo Investment has acquired a controlling stake in Bodyfriend, South Korea’s largest maker of massage chairs and other lifestyle products, in a management buyout. The transaction, which also features local PE fund Neoplux, values the company at KRW310 billion ($262 million).
Japan’s Freee raises $30m Series C roundDCM, Recruit Holdings and Japan Co-Invest have committed $30 million in Series C funding to Freee, a Japan-based provider of automated online accounting software. The investment takes the company’s overall funding to $43 million since its founding in July 2012.
Global Brain backs Japan 3D printing start-upGlobal Brain has committed JPY400 million ($3.3 million) to Japan-based Kabuku, which runs the 3D printing service Rinkak. This is part of a funding round of up to JPY750 million.
SOUTH ASIA
IHH buys PE-backed Global Hospitals for $194mIHH Healthcare has agreed to buy India’s Ravindranath GE Medical, operator of the Global Hospitals brand, for INR12.8 billion ($194 million) in cash. The company is backed by Everstone Capital, IFC and Sabre Partners.
Gateway offers to Blackstone exit route
Indian logistics company Gateway Distriparks (GDL) has offered to buy The Blackstone Group’s stake in its freight subsidiary GatewayRail Freight (GRFL) for INR6 billion ($90.3 million). The offer, which was announced in a regulatory filing, would allow the GP to exit GRFL for twice the INR3 billion it paid for its stake in 2010.
I Squared backs India rooftop solar playerGlobal infrastructure investor I Squared Capital has invested an undisclosed sum in Amplus Energy Solutions, an India-based owner and
operator of distributed rooftop solar power. The new capital will go toward a centralized monitoring facility outside New Delhi and expanding project and field teams nationwide.
VC-backed Komli to sell India business to SVGVC-backed digital media firm Komli Media has agreed to merge its India business with that of industry peer SVG Media. This follows the sale of Komli’s Southeast Asia unit to Malaysia-based Axiata Group. The merger with SVG is expected to create India’s largest mobile marketing company with a 60% share of digital ad spend.
Times Internet to support Coursera in IndiaTimes Internet, an Indian internet and mobile service provider that has backed several local start-ups, has joined a $49.5 million first close of a Series C round for US-based online education provider Coursera. It will help the company with marketing and advertising in India.
SOUTHEAST ASIA
OCBC closes debut SME-focused fund at $392mSingapore’s OCBC Bank has closed its debut small and medium-sized enterprise-focused fund at S$550 million ($392 million). The Lion-OCBC Capital Asia Fund was raised through the firm’s mezzanine capital unit and will be managed by OCBC subsidiary Lion Global Investors.
Denham, Nexif form power investment platformDenham Capital has partnered with Singapore-based power management company Nexif to form an investment platform that will commit more than $200 million to energy projects in Southeast Asia. The partnership will seek opportunities in development, financing, construction and acquisition of both conventional and renewable power assets.
Gobi leads $5.7m Series A for Thailand’s EkoGobi Partners has led a $5.7 million Series A round of funding for Bangkok-based Eko Communications, developer of workplace messaging app Eko. The new capital will be used for Eko’s expansion into overseas markets, particularly China.
Brookfield, Kotak acquire India road, power projectsBrookfield Asset Management and Kotak Mahindra’s Core Infrastructure India Fund will buy six road and three power projects from Gammon Infrastructure Projects. The total project cost at completion is estimated to be approximately INR67.5 billion ($1.02 billion), including INR29.4 billion for the six operational projects. The projects have received INR30.1 billion in capital as of March 2015 and carried INR17.2 billion in debt.
Gammon will get INR5.63 billion in cash, and up to INR1 billion more if certain performance targets are met. The divestment will also allow the company to reduce its consolidated net debt to INR22.3 billion and improve its gearing from more than 4x to around 2x.
“The positive policy changes in the infrastructure space by the government of India in general and especially by the Ministry of Road Transport and Highway, has resulted in the revival of interest of marquee overseas investors such as Brookfield in the Indian infrastructure sector,” Gammon said in a statement. The deal also underlines the opportunity for private capital in picking up assets from infrastructure players that are under pressure to ease their debt burdens.
NEWS
Number 32 | Volume 28 | September 01 2015 | avcj.com 7
COVER [email protected]
FROM “GANGNAM STYLE” POP CULTURE to beauty balm creams, Asian consumers have developed a taste for Korea. But when Dino Ha, founder of cosmetics online retailer Memebox, tried to raise capital from domestic VC investors three years ago, few were willing to buy into this notion that a Korean start-up could go global from the very beginning.
Ha, who previously worked for global fashion brand Tom Ford and then South Korean e-commerce platform TicketMonster, turned his attentions to the US. He submitted his business model to Y Combinator and Memebox became the first – and so far the only – Korean start-up to be accepted into the accelerator program. In March, the company closed a $17.5 million Series B round from a group of Silicon Valley-based investors including Formation 8, Goodwater Capital, AME Cloud Ventures and FoundersClub. The valuation was said to be $100 million.
More than 70% of Memebox’s employees are based in Korea, but its website is entirely in English so as to focus on overseas customers. The company has already expanded into the US and China, and plans to add four more Asian countries to its coverage next year. By 2018, the aim is to be in 12 markets.
“The start-ups ecosystem has changed over the years. When Coupang launched in around 2010, it could focus on the domestic market but now you need to be a global company from day one,” says Ha. “For a start-up, you either build a company that’s going to be worth billions of dollars or you just stay small. We are building infrastructure with small teams in each country so that we can scale up in the future.”
E-commerce player Coupang recently received a $1 billion investment from SoftBank Corp. that values the business as $5 billion. Alongside mobile start-up Yello Mobile it is one of several companies to achieve “unicorn” status, or a valuation of $1 billion or more. A clutch of start-ups in different specialist verticals – including Memebox – are tipped to join the club at some point over the next couple of years.
These companies have benefited from the flood of capital entering the technology space in order to latch onto ideas that target an incredibly mobile-centric market. Nevertheless, Korea’s population is limited in size and this raises the
question as to how many unicorns the country can support and in what areas they are likely to thrive. Should the rest follow Memebox’s lead and go global?
Momentum playsVenture capital investment in Korea stands at $2.8 billion so far this year across 54 transactions, compared to $1.6 billion and 155 deals in 2014. The marked increase in average transaction size is explained by the way momentum has gathered for a select few players. When Sequoia Capital committed $100 million to Coupang in May 2014, the valuation was more than $1 billion. Six months later BlackRock Private Equity Partners led a $300 million round at $2 billion. And then two months ago SoftBank entered the fray.
These rising valuations have tracked rising sales. Coupang achieved $1 billion in annual
gross merchandise value (GMV) within three years of launch, supposedly faster than any other firm globally. GMV is now rising 80% year-on-year and the firm has an annualized revenue run rate of $3 billion. At least 70% of users access its services via mobile devices.
This success is based on the fact that mobile apps relying on widespread demand for convenience are more likely to gain traction. There are about 50 million people in South Korea, and one in five of them lives in Seoul. The combination of high population density and
mature middle-class consumers make for an ideal testing ground for mobile services.
Smart phone penetration is the fourth highest in the world, according to mobile carrier KT Corporation, and online sales came to KRW45.3 trillion ($38.5 billion) last year, up 80% from 2010. Nearly two thirds of sales were generated by online-only malls. Mirae Asset research estimates that mobile commerce will achieve 40% penetration by 2017, up from 2% in 2011.
Start-ups operating in different verticals have also seen rapid growth. Woowa Brothers launched its food-ordering platform – Baedal Minjok – in June 2010 and has since accumulated 140,000 customer restaurants nationwide. It processes more than five million orders per month and the Baedal Minjok mobile app had been downloaded in excess of 19 million times, equivalent to more than half of Korea’s entire population.
Goldman Sachs invested in Seamless, a US-based food ordering platform that merged with rival GrubHub in 2013. The combined entity went public later the same year, raising $192 million. It then led a consortium that committed KRW40 billion ($36 million) to Woowa in November last year, when the company already had a more than 60% market share.
Goldman was convinced by Woowa’s business model, which was initially similar to that seen in the West: the food-ordering platform is an intermediary between customer and restaurant,
Critical massA handful of Korean start-ups have achieved valuations in excess of $1 billion as investors look to leverage a mobile-centric consumer base. But how many unicorns can this market accommodate?
VC investment in Korean start-ups
Source: AVCJ Research
4,000
3,000
2,000
1,000
0
150
120
90
60
30
0
US$
mill
ion
Dea
ls
No. of deals, early stage No. of deals, expansion/growth capital No. of deals, pre-IPO
Amt (US$m), expansion/growth capital Amt (US$m), pre-IPO Amt (US$m), early stage
2010 2011 2012 2013 2014 2015 YTD
avcj.com | September 01 2015 | Volume 28 | Number 328
and plays little or no role in the delivery process. Woowa now takes responsibility for deliveries and is investing in its logistics system, including the recruitment of motorcycles and drivers. This means it can deliver a wider variety of fresh foods.
“Woowa’s core business is growing fast. They now have a last-mile delivery capability, delivering fresh food like sashimi and sushi. They have also developed another business called Woowa Fresh, which provides ready-to-cook types of food ingredients right to the door. And they now have a cold chain logistics system following several recent acquisitions. It is a combination of organic and inorganic growth, and the story is
very exciting,” says Jay-Hyun Lee, Korea lead for Goldman Sachs principal investment area.
In this way, online food delivery is a highly territorial business and it is difficult for domestic e-commerce marketplaces like Coupang or international competitors to enter the market. Coupang has branched out into a lot of consumer verticals, such as beauty products and clothing, and it is developing its own delivery services, but the offline logistics system is totally different from food delivery. The latter relies on cold chain and last-mile delivery by motorcycles, while the former uses truck fleets.
These sophisticated, homegrown champions present an enormous challenge to global players that set their sights on localized services in Korea. Ride-hailing app Uber tried to expand into the country but was soon squeezed out when Kakao Talk, Korea’s largest mobile messaging app, launched its own taxi-hailing service. Yello Mobile, which has aspirations to become a multi-platform internet company along the lines of US-based IAC, bought up more than 100 local mobile internet companies and is now looking for similar assets in Southeast Asia.
“There will definitely be more unicorns. If you think about the full value chain, almost anything can be turned into an online-to-offline market, whether it is a taxi-calling app or a cosmetics
online retailer. There will be many category killers that create their own markets rather than just become large commoditized platforms. It is a matter of how each player can defines its own market, how it sets up barriers to entry,” Lee says.
Changing timesBefore 2005, South Korea’s internet infrastructure was more advanced than that of the US in areas like social networking and gaming. But these positions were reversed as a result of the smart phone wave, whereby start-ups can launch businesses based on iPhone’s iOS or Google’s Android operating systems. Tae Hea Nahm,
managing director of US-based Storm Ventures, notes that Korea still has no dominant player in numerous categories, such as Airbnb-style vacation rental service providers.
While established investors such as Blackrock Private Equity are more likely to invest in companies after they become unicorns, a number of VC investors see a value-add opportunity in building Korea-US exposure so they can help category leaders in Korea pursue global expansion. Altos Ventures, Kingsbay Capital and seed investor Strong Ventures have all adopted variations of this approach. Last year, US-based VC firm 500 Startups also launched a fund to invest in Korea.
In addition to identifying trends in the US that are relevant to Korean start-ups, these investors can also bring in US VC investors to back their portfolio companies. Strong Ventures, for example, participated in an angel round for bitcoin exchange Korbit alongside several Silicon Valley-based players, including Tim Draper. Then it invited SoftBank and US-based Pantera Capital to join the Series A round. Strong also introduced DCM and Formation 8 to Tumblbug, a Korean crowd-funding site, resulting in a Series A round.
“Instead of waiting for Coupang to become a billion-dollar company and then get blue chip Silicon Valley venture capitalists on board, we
accelerate the process and get those blue chip investors involved in Korean start-ups from a super-early stage,” says John Nahm, managing director at Strong Ventures.
Although Korea is large enough to support a handful of unicorns in different segments, the market is a fraction the size of the US or China. As such, existing unicorns seek growth overseas. While Coupang has hired a Chinese CTO as it considers expansion into China, Kakao is making its acquisitions in Southeast Asia. However, just as global companies struggle against strong local incumbents in Korea, so the Koreans will have to take on competitors overseas.
Earlier this year, Woowa announced a joint venture with Line Corporation to offer food delivery services to Japanese diners. However, the management team is cautious about entering a new market due to the need to replicate the offline logistics it has built at home. The collaboration with Line is therefore nothing more than a pilot program.
Coupang faces a similar dilemma. The bulk of Sequoia’s $100 million round was earmarked for logistics – warehouses, truck fleets, and “Coupang men” to handle last-mile delivery – and it is likely that more funding will flow in this direction. Creating this kind of delivery infrastructure overseas would require a lot of time and money.
“It all depends on which verticals are you focusing on. Some domestic markets are large enough; you really don’t need to have an overseas market to focus on. And then there are some where you absolutely need an overseas market,” Han Kim, co-founder of Altos Ventures.
To the extent that Korea can monetize its cultural cachet – whether it is cosmetics, food or television dramas – in markets like China and in Southeast Asia, the cross-border angle might gain traction. If a start-up has a product or service for which consumers are willing to pay a premium because they can’t get it elsewhere, then it is possible to achieve sustainable scale.
Memebox now sells private label products, which are a key revenue driver, in outlets of Hong Kong-based Watsons and Sasa. The company wants to partner with 100 stores in Taiwan and 80 in Hong Kong by 2016. It currently has a portfolio of 500 of self-developed products, produced in China by Korean manufacturing partners.
“It is very difficult to compete with local players on the service level, but I think we have products that customers are looking for,” Memebox’s Ha says. “For example, Chinese e-commerce platforms sell close 30 brands of Korean beauty products, but on our platform we have 970 brands. The reason we just focus on beauty products is that it isn’t just about branding and marketing, but also manufacturing quality products.”
COVER [email protected]
Korean start-ups valued at $1 billion and above
Source: Strong Ventures
YelloMobileCom2US
GmarketNC Soft
Smile GateNaver
CoupangNexon
Kakao Line
US$
billi
on
10
8
6
4
2
0
Number 32 | Volume 28 | September 01 2015 | avcj.com 9
Q: When Formation 8 when it was set up what was the Asia angle?
A: The overall thesis was about having the insider perspective of Asia and Silicon Valley under one platform. If we can truly bring them together, and have a lot of arguments around it, we will be able to go after the biggest ideas with the best talent. The first fund was more about investing in US technology and bringing it to Asia. We thought that if there is a very exciting US technology company it would be silly if they weren’t thinking about expansion into Asia. At the same time, we didn’t think Asia had enough big, bold ideas from entrepreneurs so we didn’t focus on investing directly into the region, but recently that changed.
Q: What led to this change?A: In Silicon Valley every
entrepreneur wants to go after a billion-dollar idea. I used to meet a lot of smart entrepreneurs in Korea and they would present ideas for games studios. Not many of them were really thinking big – my family started LG Group and no one was saying, ‘I want to go after your family, I’m going to disrupt Samsung, I’m going to disrupt healthcare or financial services.’ Then a couple of years ago we started to see some different companies. We invested in Memebox, which distributes Korean cosmetics, and when you talk to the CEO, Dino Ha, you don’t feel like you are talking to Asian entrepreneur. Asian entrepreneurs in Silicon Valley are usually shy, they want to do well by the VCs, but Dino is just so confident – he really wants to rebuild the beauty
industry. We think now is the time to start building the brand in Asia and helping these entrepreneurs. That is why we are putting together an Asia fund.
Q: You are primarily focused on Korea and Southeast Asia. What about China?
A: We like China as a market – if you have a consumer technology there is a phenomenal growth opportunity – but it is very crowded and we are worried
about the valuations we see there. Korea and Southeast Asia are relatively untapped. We believe we have a decent network and a strong insider view in these markets.
Q: So valuations in Korea and Southeast Asia are less of a concern?
A: The entrepreneurs we like tell us they don’t really want local investor money because those investors can’t provide what they need – which is global talent. They say: ‘We know how to build the business in our own country and we’ve brought in all the local talent. But to become a billion-dollar company we need a data scientist. If we could find a product engineer who knows how to scale our product, that would be amazing.’ When we bring that to them they want to
think about how we can get the right valuation.
Q: Do you require all investee companies to go global?
A: We don’t require companies to think beyond their country, but if you are based in Singapore and only looking at the local market it is going to be small. Many of the companies we like are headquartered in Singapore and pushing into Indonesia, Thailand and the Philippines. The only country where you could
build a big business entirely domestically is Indonesia. With Korea, it depends on the business model. For example, the country could support one massive e-commerce company but I don’t know how big that is yet.
Q: Yello Mobile has been aggressive in its M&A. What is the strategy?
A: It looks like a roll-up strategy, but it’s really not. The CEO’s perspective is that lifestyles in Asia are going mobile – he wants to look at shopping, travel, digital marketing, online to offline, and new media. The infrastructure is just getting started and it’s a matter of time before there is a big wave of growth. His goal is to make sure his company is best positioned, with the best talent, before this growth comes, and the fastest way to do that
is acquiring the best team in a certain vertical. In Korea, Yello Mobile is the dominant player in its five target sectors and now acquisitions are slowing. The CEO sees the lifestyles of people in Southeast Asia as being similar to Korea – people want to do everything with their mobile phones – but the infrastructure is a couple of years behind Korea. There might be a company with all the shopping data in Indonesia but no algorithm and consumers can’t interact with
the mobile service because the infrastructure isn’t there. If Yello Mobile can acquire this company and build a local operation then it will be in a strong position when the growth happens.
Q: How do you support portfolio companies as they enter new markets?
A: Our team in Southeast Asia is helping a lot by becoming a Memebox team. They set everything up, make all the calls, order stuff. Then the key thing is networks. That is something people in the US don’t necessarily appreciate enough. When CEOs from the US go to China they can set up a lot of meetings, but we can help save time by putting them in front of the right partners, and the right people within those organizations.
BRIAN KOO | INDUSTRY Q&A [email protected]
Billion dollar ideasAs Formation 8 prepares to launch an Asia fund, Brian Koo, co-founder of the venture capital firm, explains why the strategy has evolved from rolling out US technologies in Asia to backing local start-ups
“The entrepreneurs we like tell us they don’t really want local investor money because those investors can’t provide what they need – which is global talent”
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avcj.com | September 01 2015 | Volume 28 | Number 3212
“LONE STAR IS NO LONGER THE MOST unpopular foreign investor in Korea, it’s Elliott.” The observation was made in jest at a recent AVCJ forum but it contains a kernel of truth. Lone Star was pilloried for its alleged transgressions over Korea Exchange Bank. Now hedge fund Elliott Management appears to have supplanted it as cartoon villain after mounting a challenge to restructuring within Samsung Group.
Samsung has engineered mergers between its businesses in what is seen as an effort to simplify its corporate structure ahead of a transition in control from the ailing Lee Kun-hee to his offspring.
When it was announced in May that Cheil Industries would acquire Samsung C&T – and thereby gain ownership of its holdings in various other group entities – Elliott took action. Increasing its minority stake in Samsung C&T, the hedge fund denounced the move as being counter to the interests of shareholders due to price manipulation, filed a lawsuit claiming breach of fiduciary duty, and called on investors to block the deal.
A local court dismissed the case and Samsung C&T’s shareholders toed the line, although not by much. The stock has since slumped. The conflict stoked nationalistic sentiment and also cast Korean corporate governance in an unfavorable light. It has left investors asking questions about how – and for whom – the chaebol run their businesses, when they might become more transparent, and why the government isn’t doing more to expedite the process.
“It is not the end of this type of behavior – Samsung was successful so it might encourage other chaebols,” says Jasper Kim, founder of the Korea-based Asia-Pacific Global Research Group. “When you are dealing with a high-profile investor like Elliott it is in many ways viewed as a David versus Goliath scenario.”
This debate is of indirect relevance to private equity. Divestments of non-core assets by the chaebol are seen as an attractive source of deal flow, but sales only tend to come when the parent is in severe financial distress. If these companies took decisions driven by return on equity rather than satisfying owners whose minority interests equate to control through a web of cross-shareholding, more assets might come onto the market.
No one is holding their breath. “There are always a lot of promises of chaebol rationalization, but it never happens for a number of reasons,” says Jason Shin, managing partner at Vogo Investment. “First, it is not politically advantageous to be at odds with the chaebol. Second, you can’t force a healthy chaebol to sell assets. The only way it happens is if they feel financial pain or come under pressure from creditors.”
Policy vacuumKorea fares poorly in the Asian Corporate Governance Association’s (ACGA) 2014 market rankings. Of the 11 jurisdictions assessed, it beats only China, Philippines and Indonesia. A lack of government leadership on policy reform, a failure to progress with legislative amendments, a rotation of officials through regulatory agencies,
and weak corporate governance culture among the chaebol are identified as the key problems.
Jamie Allen, secretary general of the ACGA, adds that he felt quite positive about the situation prior to the Samsung-Elliott stand-off because several large Korean companies seemed willing to engage on governance issues. There were efforts to publish audited accounts in a timely fashion, while Hyundai Motor and KB Financial both set up corporate governance committees. The latter, under pressure from shareholders, even allowed outside shareholders to submit nominations for independent directors.
However, he is particularly disappointed in President Park Geun-hye, whose administration
has made little progress on issues like reducing cross-shareholding. “We are very disappointed about the pardons she recently announced, including Chey Tae-won, the chairman of SK Group, with the old excuse that he’s needed for the national economy,” Allen says.
Such moves do little to convince minority investors that the government advocates promoting shareholder value for all investors rather than just the chosen few. “An important factor would be how the National Pension Service (NPS) and other domestic institutional investors properly balance their fiduciary duty to increase value for their Korean beneficiaries in the face of what are portrayed as nationalistic concerns,” adds Joongi Kim, professor of law at Yonsei University.
There have been some cases of shareholders applying pressure to chaebol in recent years –
usually not as aggressively as Elliott, and often over corporate Korea’s notoriously low dividend payments – and NPS has wielded its voting power. Earlier this year the pension fund opposed a planned merger between two SK Group units, citing minority shareholders’ interests. However, it approved the Cheil-Samsung C&T deal without consulting its external proxy advisory committee.
“They didn’t ask the committee for a decision because they knew it would say no,” says Bruce Lee, founder and CEO of Zebra Investment Management, a public markets fund that focuses on corporate governance. “Samsung is a lot stronger than SK politically – if Elliott targeted SK rather than Samsung it might have won.”
Governance gridlockThe shareholder spat between Samsung and Elliott Management put Korea’s corporate governance shortfalls under the spotlight, but industry participants don’t expect to see the chaebol brought into line
Korea's share of Asia private equity buyouts
Source: AVCJ Research
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015YTD Korea Rest of Asia
US$
mill
ion
50,000
40,000
30,000
20,000
10,000
0
Number 32 | Volume 28 | September 01 2015 | avcj.com 13
Some of the younger generations of chaebol founding families have poor public profiles, perhaps best exemplified by the Korean Air chairman’s daughter, Heather Cho, ordering a plane to return to the gate because she was unhappy with the way a flight attendant served peanuts. However, this dissatisfaction at an individual level is thought unlikely to deliver change. Market watchers offer different assessments of what might.
Yonsei University’s Kim points out that in the past, external crisis and pressure – although not ideal – have contributed to change. In the wake of the Asian financial crisis, Korea saw its most substantial corporate reforms in modern history, with the introduction of independent directors, audit committees, stronger accounting standards, and formal board meetings. Activism and additional oversight to enhance corporate transparency and managerial accountability together make up another key to the puzzle.
Others envisage a more gradual process. The five largest chaebol account for about two thirds of Korean GDP, which arguably puts them in a more dominant position than before the crisis, but they are operating in very different conditions. “Maybe what you need is a change of mindset; you need these chaebol leaders to realize that perhaps the way they have run these companies for the last 30 years needs to be different in a more competitive global economy,” says the ACGA’s Allen.
Sands of timeAnother impetus for change is time. Korea’s economy was built around the chaebol and they are operating on public markets that are only 60 years old. The investor community needs to mature, and at the same time, the chaebol themselves will evolve. If this does not mean cultural change, internal pressures will come to the fore, whether it is orderly succession planning or siblings fighting over assets.
With every generation most chaebol will be sub-divided among the various branches of family resulting in less concentrated ownership, Vogo’s Shin adds. Until then, private equity firms will continue to buy assets wherever they can, picking up the low-hanging fruit often present in companies that are non-core and run for family rather than corporate interests.
“Sometimes these are regarded as third-tier assets within that group and they get third-tier management,” Shin says, citing Vogo’s acquisition of the Burger King Korea franchise from Doosan Group. “The managers were from heavy industry and had no food and beverage experience. With bad corporate governance, once you buy companies from these chaebol, there is a lot of room for improvement.”
Big buyouts: Who’s selling? If and when the sale of Homeplus, Tesco’s South Korea retail operation, goes through, it could
nearly double the $6.3 billion that private equity investors have deployed in the country so far in 2015. Even in the context of Asia as a whole it is a huge deal – and would inflate the cumulative value of buyouts in the region this year by as much as one quarter.
Korea has emerged as an increasingly significant player in the Asia buyout landscape in recent years. In 2011, 12 deals were announced worth $481.5 million, or 2% of the regional total. Over the next three years the share jumped to 10%, 18% and then 27%. At $2.3 billion across 12 transactions, the 2015 figure is off pace, but should the Homeplus sale reach an agreement Korea would account for 39% of Asian buyouts, based on investment activity to the end of August.
The question is whether this run can be sustained. “The level of M&A activity in Korea continues to grow but I don’t know how much of a role private equity can play a role in that,” says Scott Hahn, CEO of domestic PE firm Hahn & Co.
Of the approximately 2,100 private equity investments in Korea since 1999, 13 have been $1 billion or more and all bar five have been announced in the last three years. They offer an interesting blend of corporate divestments, restructurings led by funds set up to do a specific deal or with ties to large domestic financial institutions, and the odd growth investment.
What is notable about each of the three largest deals completed in the last two years is that the seller was foreign: Hahn & Co. led the acquisition of Halla Visteon Climate Control (HVCC) from US auto parts maker Visteon Corp; Carlyle picked up ADT Caps because Tyco International, which is also US-based, wanted to offload the asset; and MBK Partners bought ING Life Insurance from Europe’s ING Group.
In numerous cases, the sale is driven by difficulties at the parent level rather than within the Korean business. For example, ING was obliged to sell most of its Asian operations as a condition of its bailout agreement in 2008, while Tyco’s exit from ADT was part of a broad restructuring initiative. The Homeplus transaction would add another to this list – UK-based Tesco is divesting the asset to strengthen its balance sheet following a series of profit warnings.
As a result, the much-talked-of spin-outs from chaebol companies under pressure from creditors to pay down debt are not making a mark at the top end of the spectrum. But industry participants warn against overplaying the foreign seller angle.
“I don’t believe the volume of businesses being sold by foreign corporate owners [or strategic investors] is necessarily increasing, however, the attention to this subject has increased because these businesses are so large,” says Michael Chung, managing director at Morgan Stanley Private Equity Asia.
Moving further down the list, deals involving domestic sellers far outweigh the foreign, although the chaebol spin-outs fall into two categories. First, there are genuine PE buyouts such as MBK Partners’ acquisition of water purifier manufacturer Woongjin Coway. Second, there are deals in which the PE firm is junior partner to a strategic player. For example, Jabez Partners participated in the purchase of Green Non-Life Insurance in 2013 but the deal is said to have been led by domestic beef cooperative.
Opinion is divided as to whether the restructuring opportunity is living up to its hype. Hahn & Co’s Hahn says no, adding that the low interest rate environment gives chaebols funding options that allow them to avoid asset sales. “With this much liquidity in the economy, there are many iterations before you have to sell to private equity,” he says.
However, Jason Shin, managing partner at Vogo Investment, is confident it will remain a consistent source of deal flow – if not at the large end of the spectrum then at least for deals in the $50-300 million range. “There are always going to be chaebol groups in distress. We don’t know when it’s going to happen, but it’s going to happen,” he says.
“The level of M&A activity in Korea continues to grow but I don’t know how much of a role private equity can play a role in that” – Scott Hahn
avcj.com | September 01 2015 | Volume 28 | Number 3214
VOGO INVESTMENT KNEW THAT SOUTH Korean lifestyle product manufacturer Bodyfriend was looking for a private equity buyer. But the GP also knew it couldn’t tie the knot without a long courtship.
“We worked on that owner for one year. And for the first six months, all they kept saying was, ‘You come in as a minority shareholder, you come in as a second shareholder,’” recalls Jason Shin, Vogo managing partner. “It took six months of persistence to convince them an outright control sale was the best option for them.”
Vogo’s pursuit of Bodyfriend, which ended recently with the firm taking a 90% stake in the company, was just one performance of a dance to which Korean mid-market GPs are learning the steps by heart. Opportunities in the middle market are not rare, but a certain degree of finesse is required to take advantage of them. For those funds that do show the necessary level of commitment, the segment holds the promise of considerable rewards.
Korea’s private equity market has come a long way since the days following the Asian financial crisis, when the field was held in disrepute. Industry participants who remember the time when the public perception of private equity firms was as unethical manipulators of markets now say they are increasingly accepted by the financial community.
“Whether you are local, international, or a regional private equity firm, today you are generally respected as a deal counter party and a legitimate owner of businesses by strategics as well as individual owners,” says Michael Chung, managing director of Morgan Stanley Private Equity Asia (MSPEA).
Three flavorsThe history of middle market deal flow in Korea supports this story of growing acceptance. AVCJ Research data show that the volume of deals executed in Korea below $500 million has grown from 142 in 2005 to 371 in 2014. The vast majority of these transactions have consistently been in the segment below $200 million. The total amount of money invested in the sub-$200 million segment has increased as well, from $3.7 billion in 2005 to $9.1 billion in 2014.
These deals tend to fall into one of three types. The first is a classic succession play for
family-owned companies whose aging founders want to hand over control to a new party, but cannot find anyone suitable within their immediate surroundings. These deals have increased lately, as a generation of entrepreneurs who first achieved success in the industrialization of the 1980s and 1990s has come of age.
Another important source is chaebol groups that need to spin off underperforming or non-core assets. PE firms may be seen as a more attractive partner for these conglomerates, since they are not competitors in the sense that other chaebol are. The final group comprises local companies that want to expand overseas. Often these businesses have done well within Korea but feel they have reached the limit of what they can accomplish domestically.
“These companies need to diversify their customer portfolio and also the supply chain in
the global market,” says Won-pyo Choi, partner at Bain & Company. “Sometimes they don’t have their own capabilities, so they would like to get some funding, and also get some help in terms of knowledge of the overseas market, connecting to the overseas customers, and so on.”
Unison Capital’s experience with bubble tea chain Gong Cha is an example of this last type of deal. The Japan-based PE firm – which now has a dedicated Korean fund – bought a 70% stake in the master Japan and Korea franchises for the company, which is based in Taiwan. From the initial level of 255 stores at the time of acquisition, the firm boosted the number of outlets in Korea to 340, and is now about to open
its first store in Japan.However, T.J. Kono, a partner at Unison, says it
is important not to overestimate the importance of overseas expansion to Korean companies. “Of the companies we look at, 20-30% have an immediate overseas angle, or they have significant business importing something from overseas, and so on,” he says. “For 70-80% of the companies, operational improvement is the fundamental theme, and then overseas is just an upside to the deal.”
Sourcing on the quietWhile such acquisitions offer GPs numerous chances to prove their value, they must first meet the fundamental challenge of finding the deals. This can be especially difficult in Korea, where companies place a particular premium on confidentiality. There are transactions that
go through a standard auction process, but it is far more common for deals to be done on a proprietary basis. This applies not just to succession issues, but also to purchases of chaebol assets.
Since investment banks and other typical sources of information on private equity deals are not as useful in Korea as in other markets, a high premium is placed on personal networks and acquaintances. GPs often find it useful to cultivate contacts among the ecosystem of accountants, lawyers, and other players who operate near the sellers themselves.
“To make deals in the middle market, it’s important to have a good network, and also
Behind the curtainKorea’s middle market continues to blossom thanks to succession issues, restructuring and ambitions to expand overseas. But deals are struck in strict confidence – and GPs say that is how it should remain
No. of deals
Korean PE deals below $200 million
Source: AVCJ Research
10,000
8,000
6,000
4,000
2,000
0
400
300
200
100
US$
mill
ion
Dea
ls
Total deal size (US$ million)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number 32 | Volume 28 | September 01 2015 | avcj.com 15
good source building with the owners directly,” says Bain & Co’s Choi. “So the PE fund managers go out to dinner and drinking with the owners quite frequently to source the deals.”
The reasons for this requirement vary according to the nature of the players. The chaebol sellers may be worried about competitors getting wind of the deal and making a play for the asset, strengthening themselves at the seller’s expense. Independent owners, meanwhile, are concerned about being publicly portrayed as weak, for needing an outsider to help take over the company, or as a failure for not keeping the business within the family. This can be a greater psychological burden than that faced by chaebol groups, which generally have multiple other businesses to fall back on.
“If you are an owner of just one company, and you’ve spent your last 40 years growing it, the last thing you want is to be on the front page of the newspaper, reading the speculation where such and such company is being sold, why is it being sold, what is going on with the family,” says Vogo’s Shin. “And what if, at the end of the day, they fail to sell? That’s fatal for them.”
MSPEA’s experience with tissue paper manufacturer Ssangyong C&B and Monalisa shows how important a reputation for discretion can be for a GP seeking a control deal.
The PE firm took over from a CEO who was planning to retire, but did not have a readily available successor. He felt that a sale would be a good way to keep the company going, but feared the repercussions if word of the talks leaked out to the unionized work force. MSPEA was able to leverage its experience with previous takeover deals to convince the founder that they would keep his information safe.
“We had successfully closed the [restaurant chain] Nolboo investment two years before, which had demonstrated our ability to execute on a confidential basis,” says Chung. “This, along with the reputation of Morgan Stanley, helped position us well for the Ssangyong C&B and Monalisa situation. We were consequently able to close that transaction on a proprietary basis.”
The Ssangyong C&B and Monalisa deal shows that foreign GPs have the potential to do well in Korea’s middle market. However, they must be mindful of challenges relating to the need for personal connections with sellers.
It would be natural to suspect that GPs of a Korean origin hold an advantage when it comes to this kind of networking. After all, the team of a domestically originated GP very likely has grown up in the target country, speaks the language, and understands the business customs better than a transplanted manager.
Data provided by Thomson Reuters does seem to bear this estimation out. Between 2006
to 2014, the number of inbound buyout deals – those carried out by outside firms investing in Korea – valued in the midmarket range below $200 million rose from 71 to 136. Over the same period, the number of such deals done by domestic funds rose from 609 to 1,072 – a slower growth rate that still nevertheless reflects nearly 10 times as many deals.
However, these numbers do not tell the whole story; as mentioned earlier, foreign GPs may appeal to a different group of sellers than domestic funds. A fund that can boast significant
international connections and a global network can be a much more attractive partner than a domestic GP to companies that are considering overseas expansion.
In addition, local firms are subject to restrictions on their actions that foreign originated GPs do not have; due to the more limited sources of their funding, it can be harder for them to justify acquiring an asset that is for sale by another domestic fund.
“Once they make an investment, when they exit, they cannot actually sell their portfolio companies to another Korean local fund, because the LPs are the same, so they have some conflict,” says Bain & Co’s Choi. “Some of the global funds are free from that constraint, so they can buy some of the secondary deals.”
Exit issuesExits are not a major worry for middle market players, but some GPs do see a potential for concern in the long run. Despite the growth in acquisitions over the last five years, exits have not kept pace. AVCJ Research shows the number of exits for less than $500 million holding more or less steady from 2010 to 2014. This suggests that the number of portfolio companies in the midmarket space is increasing.
Two factors have the potential to make exits trickier for GPs. One is, perhaps counter-intuitively, increasing valuations – as a company
rises in value, the potential price tag can put off all but GPs with the deepest pockets. With fewer bidders competing for the asset, it becomes more difficult to drive a higher bargain in a bidding situation. The company would need to be particularly attractive to make the price worthwhile in this case.
Another issue is lack of control. For GPs with minority stakes, exiting under the conditions of their choosing is nearly impossible. They are at the mercy of other decision makers, such as company management; this may be an
uncomfortable situation, particularly with large amounts of money at stake. This prospect is why some managers, like MSPEA’s Chung, prefer to stay away from minority deals.
“I believe GPs will need to be ever more mindful of their exit strategies going forward,” says Chung. “That being said, when you own control of a business and that business sustains its strategic value, generally speaking, you hold the ability to sell; you can run a process tomorrow should you decide to. The question would be on the valuation that buyers attribute to your asset, but these are generally sellable.”
Despite these issues, the outlook among GPs for the middle market remains confident. Managers feel that the overall lack of publicity, compared to that for larger deals above $500 million, means that the middle market is likely to remain immune from the investor enthusiasm that can drive up valuations beyond an affordable level. GPs that can maintain their appeal to sellers should have few problems thriving.
“Obviously there are enough players that we face competition,” says Unison’s Kono. “But we try to make our value add to the company very clear in our communication early on. And that makes it easier for us to convince the seller to let us deep dive into the company so that we can bring up very concrete ideas. It has worked in the past, and that’s certainly our strategy.”
M&A deals below $200 million
Source: Thomson Reuters
20062007
20082009
20102011
20122013
2014
Inbound deals Domestic deals
Dea
ls
1,200
900
600
300
0
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18 September | Renaissance Hong Kong Harbour View Hotel
ESG FORUM2015
The first event of its kind in the region, the inaugural AVCJ PRI Responsible Investment Forum will provide a platform for education, benchmarking and the exchange of ideas on how GPs operating in Asia can incorporate Environmental, Social and Governance (ESG) principles across the companies in their portfolio.
Mitigate risk and maximize exit returns with responsible investing
Ken MehlmanMember & Global Head of Public AffairsKKR
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Adam BlackPartner, Head of SustainabilityDOUGHTY HANSON & CO PRIVATE EQUITY
Christophe BongarsCEO and FounderSUSTAINASIA LIMITED
Chris ChiaManaging PartnerKENDALL COURT CAPITAL PARTNERS
Doug A. CoulterPartnerLGT CAPITAL PARTNERS
Darren MassaraManaging PartnerNEWQUEST CAPITAL PARTNERS
Brian LimPartnerPANTHEON
Steven R. OkunPublic Affairs DirectorKKR
Frederick J. LongFounding Managing DirectorOLYMPUS CAPITAL ASIA
Nicholas BloyCo-Founder and Managing PartnerNAVIS CAPITAL PARTNERS
James PearsonChief Executive OfficerPACIFIC RISK ADVISORS
Ed NortonSenior Advisor, ESGTPG CAPITAL
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