Evia will be focusing on three main factors; mainly the growth stage of a company, geographic locations familiar to the Principals and sectors with high growth investment opportunities that fall within the area of expertise of the principals and their advisory network. Though we will be responsive to changing market conditions throughout the life of the Fund, we anticipate that the Fund’s primary focus will be on fast growth enterprises in the following sectors:
Telecommunication, Media and Technology (TMT) – Evia expect exciting development within this industry that will be led by a few major trends. Big data analysis has been receiving a lot of attention and investments, offering major advances ranging from improved promotion targeting to customised management of medical treatments. We believe companies that adopt this will be able to enhance value to its customers. Another trend is the adoption of the Internet of Things by enterprises. This is expected to increase the adoption of consumer technologies in the enterprise space, impacting the way businesses are conducted. We are also seeing fast development in the wearable technology space.
Healthcare – Evia expect one focus of the Fund to be on life science and healthcare companies including biomedical device and/or drug development companies with near term exit visibility. With significant government endorsement and funding, Singapore is rapidly establishing itself as the leading hub in Asia for biomedical sciences. The country’s superior clinical trial infrastructure and intellectual property protection laws are also attracting the world’s leading drug and medical device companies to establish a presence in Singapore.
Resources & Resource related – This sector covers a wide scope ranging from natural resources that are mined or raw to a range of services to support the resource industry. As more energy is being produced and consumed, we expect to see great value and opportunities in investments which address problems associated with the diminishing supply of several natural resources.
Consumer Related Industries – The emergence of a growing middle class is one of the vital mechanisms behind changing attitudes towards consumption in the region. Asian populations are experiencing rapid growth in income, resulting in increased spending power. The emergence of a growing middle class is one of the vital mechanisms behind changing attitudes towards consumption in the region. The Asian consumer market is already approximately 40% the size of the US consumer market, making it the second largest in the world. In addition we see a change in lifestyle brought about by the migration of population from rural to urban cities. The aging population is also driving demand for geriatric care services which is a problem many developed countries are facing. This market includes home care, adult day care and institutional care services, telehealth sector, specialised services for silver shoppers like travel and dining.
Environmental Technology – Given Asia’s growing need and awareness for water self-sufficiency, environmental preservation and energy, Evia expects to find investment opportunities for the Fund in water technology, bio mass, waste treatment and clean tech. Bio and clean chemical fuel is also another potential area of focus and the Principals intend to search out companies with proprietary technologies and minimal capital expenditure requirements.
Precision Manufacturing – There are attractive investment opportunities in China-based companies that are engaged in design and manufacturing. Evia’s investments in AAC Acoustics and Sunny Opticals have shown that companies in China are well poised to take on the Taiwanese and Japanese players, both of whom have traditionally been the leaders in precision manufacturing space.
The Principals expect to leverage their extensive personal networks to obtain qualified proprietary investment leads for the Fund. Since the inception of Evia in 2004, the Principals have spent significant amounts of their time in networking and enhancing their personal networks in China and Singapore. Evia has had sufficient, and in fact excessive deal flow, both proprietary and through co-investment opportunities from peer firms. The strategy engaged in future funds will be largely similar. We will focus on our network of successful entrepreneurs, source out high quality listed companies with strong growth story that require growth capital at a project level. Such investments will be highly stable with built-in guarantees.
We expect the Fund to generate top docile investment returns by targeting niche businesses in Asia with Pan-Asian and/or global potential. Evia intends to focus the Fund on portfolio companies that have proprietary and innovative business models, valuable intellectual property and proven management teams. In addition, we intend to leverage the Asian economies for market and talent for the Fund’s portfolio companies. To manage portfolio risk, Evia expects to diversify the Fund across geographic regions, business sectors and stage of investment.
When evaluating investment opportunities, Evia intends to study key aspects of prospective portfolio companies, including:
Composition of the board of directors and management, including their backgrounds, track records, venture capital funding, and corporate exercises or mergers and acquisition deals that they have undertaken.
The experience and execution capability of the management team, and its ability to identify product needs, significant market potential and cross-application potential. The management of portfolio companies should preferably have proven records of leadership, in-depth sector understanding, the ability to attract the best people and adapt in dynamic, highly competitive environments.
The exclusive nature of the company’s technology, scope of protection of its intellectual property and the extent of existing and potential competing technologies. The portfolio company should have intellectual property and product differentiation with long term defensibility, first-mover advantages and scalability.
The company’s cash burn rate, cash funding position and ability to mobilize sufficient capital to fund its research and development and other business development work.
The existence of significant entry barriers which will allow the company to build sufficient lead time over potential competitors. Such barriers to entry can come in the form of proprietary technical know-how, patents, capital requirement, market access, regulatory requirements, etc.
The existence of market potential; particularly, segments within industries that have very large market sizes, rapid growth, high profitability, favourable timing, and attractive competitive dynamics.
Sale, merger or listing exit potential within two to three years including follow-on investments.
Scope for collaboration with the Fund’s other portfolio companies to build portfolio synergy through leveraging complementary products/ services, business linkages, partnerships, and management resources and expertise.
AAC Acoustics is one of the world’s leading manufacturers of acoustic components. The company supplies a full range of speakers, receivers, transducers, microphones, headsets and vibrators to some of the world’s most established brands to produce quality acoustic components for their mobile phones, computers, cars, medical instruments, hearing aids, cordless phones, MP3 players, game consoles and many other consumer devices.
AAC Acoustics was introduced to Evia Growth Opportunities Ltd by Chengwei Ventures. The company had turned down investment offers from funds from Hong Kong and other more established venture capital franchises in China for its Series B financing because it wanted an investor who could help them outside of China. Evia was selected in part on this basis.
Evias post investment value-add was mainly in two areas:
Although Evia has exited its investment in AAC Acoustics, the team still maintains very good contact with both its management and current board members. We are always on the look out to see if we can help the companies grow further.
Biosensors International develops, manufactures and commercializes innovative medical devices used in interventional cardiology and critical care procedures. The company is now a leader in the drug eluting stents (DES) space, an evolving therapy that is rapidly gaining market share from traditional cardiovascular therapies. In June 2006, Biosensors was named one of top fifty medical technology companies to be watched because of its innovative biodegradable polymer DES. Several of its products have obtained the CE Mark, and are sold in the global market. The company is also expanding its product pipeline through strategic acquisition.
Biosensors is a deal familiar to the Evia because one of the founders, Mr Ng Tee Khiang, is a seed investor in the company. Evia participated and led Biosensors’ financing round in 2004. At the point of Evia’s investment, Biosensors’ revenue was largely attributed to its critical care products. Although the company had a solid pipeline of drug eluting stents (“DES”) under development, none of these were close to attaining a CE mark at that time.
Upon investment, we persuaded Biosensors to take on a licensing strategy for its intellectual property in the DES space, in addition to manufacturing its own stents. Licensing deals were struck with Guidant, Terumo, X-stent and others. In the first year post- Evia’s investment, Biosensors recorded its largest licensing revenue from Guidant, which took the company to profitability for the first time in the company’s history, and provided the basis to engage the Singapore Stock Exchange for a listing on its Main Board. Biosensors’ IPO on SGX in 2006 also marked the first time a Singapore biomedical device company came close to S$1 billion market capitalization value.
Besides the aforementioned, we also subsequently inducted one of our advisors, Mr Chua Kee Lock, who was then a managing director of Walden International, to join Biosensors International as its President and Executive Director. Mr Chua has since put Biosensors on a firm footing in Asia by increasing its distribution footprints greatly, firstly via the acquisition of JW Systems, the fastest growing Chinese stent company in PRC China, and then signing up exclusive distribution deals for stents and DES devices in big potential markets such as Indonesia and India. Biosensors has since then also achieved CE marks for its various DES, including the ground breaking Biolimus stent (with efficacy known to be even better than those of Johnson & Johnson and Boston Scientific; the two (2) leading players in the world in the DES space right now).
Going forward, we foresee ourselves continuing to be deeply engaged with Biosensors International. Since 2011, we have introduced three (3) independent directors to the board. This deal transaction captures the intensity and interaction typical of early stage investments that Evia has committed to.
Ezion Offshore Logistics Hub is a wholly-owned subsidiary of Ezion Holdings Limited, a company listed on the main board of SGX. Ezion Holdings (listco) has 2 main business divisions: the first specializes in the development, ownership and chartering of strategic offshore assets such as liftboat; and the second is in the provision of offshore marine logistics and support services to the offshore oil and gas industries. Ezion Offshore Logistics spearheads Ezion’s marine logistics business in Australia, where the company has clinched 2 major contracts to date; including the latest (worth A$55M) to provide full logistics and support services for the haulage of equipment and modules for the development of LNG facilities on Curtis island, Queensland, Australia.
Evia knows the entrepreneurial management team of Ezion Holdings very well. The relationship has gone back to the earlier days when the CEO of Ezion was running its predecessor firm K S Energy, and the fact that Evia and Ezion’s management team co-invested into some PE investment deals together. This round of investment opportunities came about because one of the earlier financial investor had its investment fund life coming to an end, and there was a need to liquidate.
This transaction involves buying out the entire stake (into Ezion Offshore Logistics) from an existing investor. As of the date of the inked transaction, the Manager’s stake is already in the money (on the assumption that we will convert our stake at the subsidiary level to the listed entity). Given the strong slew of contracts firmed up by Ezion Holdings ,with clear visibility on their earnings, we are optimistic that this investment will do well as part of our overall portfolio.
The investment into Ezion Offshore Logistics entitled the fund to a minimum return during the investment period, which met the fund’s returns requirement. In addition, the investment structure included a conversion option into the listed holding company, giving Evia an unlimited upside in the event that the listed entity’s share price rises.
When the company exhibited potential for strong earnings visibility and growth, Evia exercised the option to convert the shares into Ezion Holding’s shares. The investment in Ezion Offshore clearly shows Evia’s strength in identifying high growth companies with clear exit visibility within the fund’s charter life, with downside protection and option to benefit from the growth potential of the company.
Post investment, we have been engaging the company with respect to its need to raise more money to fund its new liftboat chartering contracts. Besides assistance in fund raising, we have been introducing new business leads to the firm.