News & Analysis

Temasek subsidiary completes one of Asia’s largest preferred deals

Asia's first 'decacorn', Grab, was among assets moved into a continuation vehicle as part of the process run by Vertex Holdings.

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A GP-led process involving a subsidiary of Temasek is possibly the largest preferred equity secondaries deal to take place in Asia.

Singapore-headquartered Vertex Holdings gave limited partners in multiple funds the option to sell their stakes or roll into a continuation fund as part of a process advised by Evercore, Secondaries Investor reported in July.

It was structured as a preferred equity deal, with lead investor LGT Capital Partners and syndicate partner Axiom Asia Private Capital receiving early preferential cashflows from the portfolio in return for paying a higher price on entry, according to two sources familiar with the matter.

“It allows the buyer to get a bit of downside protection though preferential waterfalls and early distributions and it helps with pricing for the sellers,” said one of the sources, adding that Asian venture assets often sell at a discount of 20 percent to 30 percent to net asset value or greater.

The continuation vehicle closed on “just shy” of $500 million and Secondaries Investor understands that preferred equity accounted for at least half of the NAV. Secondaries Investor first reported on LGT’s involvement in the deal in December.

The portfolio comprises 15 companies managed by Vertex Southeast Asia and India and Vertex China, two separate GPs under the Vertex Holdings banner, Secondaries Investor understands. China accounted for a majority of the assets, with Singapore, Indonesia, Japan, India and Taiwan also represented.

Prized assets include Singaporean ride-hailing service Grab, described by CNN as “Asia’s first decacorn” – a company valued at over $10 billion – and Indian online children’s retailer Firstcry, Secondaries Investor has learned.

Founded in 1988, Singapore-headquartered Vertex Holdings has around $3 billion in assets under management across several geographically targeted VC funds, according to Secondaries Investor data. It makes early-stage information technology and healthcare investments in South-East Asia, India, the US, China and Israel.

The Asia-Pacific region accounted for 6 percent of GP-led deals by volume in 2020, according to research by advisor Greenhill.

Vertex and LGT did not respond to requests for comment. Axiom and Evercore declined to comment.