Tikehau, Foundation discuss their Asian expansion plans

Tikehau Capital acquired Singapore secondaries firm Foundation Private Equity in July, having entered the credit secondaries market in 2019.

Tikehau Capital expanded its Asian presence through the acquisition of Singapore-headquartered secondaries firm Foundation Private Equity in July.

The Paris-headquartered manager, which has €29.4 billion in assets under management, also committed to the $110 million first close of Foundation’s debut fund, Secondaries Investor noted at the time.

We spoke to Jason Sambanju, partner and chief executive of Foundation and Jean-Baptiste Feat, global co-CIO and co-head of Asia at Tikehau, to learn more about the rationale behind the deal and their plans for the Asian secondaries market.

What made you decide to partner with Tikehau Capital?

Sambanju: Sometimes you have to roll up your sleeves and get your hands dirty

Jason Sambanju: I started the business back in the middle of 2017 and Jeremy [Foo, partner] joined us in early 2018. Having spent the better part of two and a half years going through the entrepreneurial bootstrap journey, we realised there was a desire and need to build an institutional background to attract an institutional capital base. You can do it by yourself, but there is a gap between what you can do in the space of three years and what you can do in 17 years.

Culturally, Tikehau Capital is very entrepreneurial. It has grown its assets under management at an exponential rate since its founding; you don’t do that just through sheer luck. We recognised that having access to that capability was ideal for us given the path we see for ourselves.

Do you see synergies between Foundation and Tikehau Capital’s private credit secondaries platform?

Jean-Baptiste Feat, Tikehau Capital
Feat: Tikehau can now acquire mixed portfolios of debt and equity

Jean-Baptiste Feat: Jason and Jeremy have helped our private debt team look at some assets and managers in Asia, even if its strategy is more focused on the US. We can look at a portfolio involving both PE and private debt assets. Combining those two areas of expertise and splitting the assets at the end can help you be more competitive or more relevant for the seller. You can put in a bundle offer for 100 percent of the portfolio with two different teams. That’s happened in the past and certainly will happen in the future.

What does an ideal GP-led deal look like for Foundation?

JS: Five to eight assets that we think will reach maturity over the next three to four years, hopefully a substantial portion in the next two years. [It would be] a portfolio that we can diligence, because there are some portfolios that you just can’t. We need to be able to be on the ground, to meet with the companies and do the same with the GP. Almost always we prefer to be in the lead position. We are pretty opportunistic in terms of asset type. If we had a choice, it would be a diversified portfolio. We have capabilities to diligence in China, India and Southeast Asia.

Are you interested in situations where there is stress or distress?

JS: We’ve built our business to be forensic and understand at the end of the day that there are cases where we’ll have to roll up our sleeves and get our hands dirty. Assets go into distressed situations for a host of reasons. Sometimes they just need a boost, reorientation or a bit of follow-on capital give it a kick. There could be a situation where growth has flatlined because the GP hasn’t been able to support the company and if you can come in with a reasonable cheque, it could swing back to growth.

How does Tikehau Capital plan to continue building out its secondaries platform?

JBF: We are very entrepreneurial and opportunistic. I don’t think we have a pre-conceived idea of how we want to develop a specific business, whether private debt, real estate or secondaries. The Foundation deal was a deal of alignment of views in terms of the way we do business, the way we approach transactions… We will concentrate our efforts for now on helping Jason, Jeremy and the team grow the Foundation platform, which means helping them with fundraising sourcing and cross-selling. We are not involved directly in investment decisions but are always happy to help.

Jason Sambanju is the founder of Foundation Private Equity. He has been a private equity investor in Asia since 2000, spending the last 13 years in secondaries. He was previously Head of Asia, Secondaries for Deutsche Bank Private Equity.

Jean-Baptiste Feat joined Tikehau Capital in 2008. He currently serves as co-chief investment officer of Tikehau Investment Management and co-head of Asia. He was co-head of Private Debt between 2013 and 2020.