Singapore is home to a vibrant tech and venture capital ecosystem with over 4,000 tech-enabled startups and more than 100 VC firms. Among them, Vertex Holdings is one of the oldest VCs in the city-state.
Vertex Holdings was established in 1988 as the corporate venture capital of Singapore Technologies and subsequently reorganized to become the wholly-owned subsidiary of Temasek Holdings. However, it went into hibernation when the dot-com bubble popped, remaining dormant between the late 1990s until 2008 when Kee Lock Chua was appointed as CEO. Prior to taking the helm at Vertex, Chua held senior positions at numerous companies, including medical device manufacturer Biosensors International Group and US-headquartered VC firm Walden International.
“We have changed quite a bit since then. After we restated in 2008, investments were funded 100% by Temasek. Then, in 2014, with the support of Temasek’s management, we transformed into a partnership structure. Vertex Holdings is now the anchor for six underlying funds, and each of the funds raises 60–70% of capital from external global investors,” said Kee Lock Chua, CEO of Vertex Holdings and managing partner of Vertex Ventures Southeast Asia and India.
Vertex has gone from being a single limited partner venture fund in 2008 with USD 200 million in assets under management (AUM) to becoming a global VC platform, with many seasoned LPs and USD 4.5 billion of AUM today. It has four funds across different regions—China, Israel, Southeast Asia and India, and the United States. Vertex Ventures HC focuses on early-stage companies in the biotech and medical tech sectors, while Vertex Growth supports more mature companies. Some of the firm’s notable portfolio companies in Southeast Asia are Grab, PatSnap, Payfazz, HappyFresh, Warung Pintar, and Nium.
In July, Vertex Holdings raised SGD 450 million (USD 331.1 million) by issuing a seven-year Singapore dollar bond at a coupon rate of 3.3%. The six funds need to raise money every three years, and Vertex Holdings, as an anchor investor, needs to support them every two years, according to Chua. The firm will use the fresh capital to increase investment in its funds and diversify Vertex’s sources of long-term patient capital as part of its continued support towards funding disruptive companies.
“We’ve never raised money using bonds before. This bond means that people understand what we’re trying to do and gives us the opportunity to secure capital from this alternative fundraising method,” said Chua.
The firm makes about ten investments per year through its Southeast Asia and India fund. Check sizes range from USD 2 million to USD 12 million. “We are a disciplined investor, not a very prolific one. We don’t do deals every week; we tend to spend time working with entrepreneurs, figuring out what the issue they’re trying to address is and how we can help them,” Chua said.
Besides providing capital, the firm also supports founders by connecting them with partners in markets where Vertex has operations and strong connections. “Of course, we’re always willing and ready to introduce founders to potential investors for the next funding round. We also help founders with recruitment.”
Eyeing Singapore’s first SPAC listing
Vertex Holdings is reportedly planning to raise funds for dealmaking by listing a SPAC in Singapore. If this happens, it will be the first company to do so on the Singapore Exchange, SGX. Chua declined to comment on the matter, but he believes that since Singapore recently sought market feedback on a proposed regulatory framework for SPACs, the bourse holds great potential as a listing option for tech companies in the region.
“I think [giving SPACs the nod] is a good idea because it takes six to nine months to go through a normal IPO process in Singapore. Companies will choose the US or Hong Kong market because why would you come to this market where the valuation would be lower?” Chua said. A green light for SPACs will also give SGX a competitive advantage over regional rivals, Chua said. Generally speaking, it is easier for Chinese companies to list in Hong Kong rather than enterprises from countries like Malaysia, Singapore, or India, he said.
Meanwhile, the US stock market has the highest trading liquidity in the world, so a company needs to have a valuation of at least USD 5 billion to attract investors’ interest. “If you have a company with a size of 1 or 2 billion dollars, it’d be more difficult to raise money in the US. Therefore, listing in Singapore could be an option,” Chua added.
As Southeast Asia’s major tech firms like Grab, GoTo, Bukalapak, Carousell, and PropertyGuru eye opportunities to go public in the near future, the region’s tech ecosystem is showing signs of maturity. As a result, more exits will lead to more diverse investment funds in the region.
“I think the trend will be very similar to what China went through several years ago, or even in the US 50 years ago. First, we’ll see more exits from startups, it legitimizes the market here. Second, as we have more successful entrepreneurs, many of them will start to invest in smaller companies, which will create a new pool of startups,” said Chua. This might spur aspiring entrepreneurs to create new innovations that feed into a new cycle in a sophisticated ecosystem.