Investment Strategy
We intent to invest in companies who share our vision and ambition. We will focus on micro-cap companies in Southeast Asia, with the potential for continued growth throughout Asia or further abroad. Our target companies’ valuation will range from A$ 1 million - A$ 10 million, with the flexibility of equity, debt or hybrid investments. We can increase our purchasing power through co-investment collaborations.
As for our investment preferences, we intent to invest only in companies, where we can add value. We like companies that take pride in their brand and origins, and who have the potential to dominate market share in their respective markets. A strong management team is the key success factor of any business, and we recognize team efforts to build a successful venture.
Investing in the Asia-Pacific Region
Research in market segmentation has identified the Asia-Pacific as one of the most preferred regions for excellent future growth prospects. Over the past few years, the government debt of Western nations have increased dramatically. In comparison to Europe, the United States and other G20 nations, Asia’s policy makers will possess more flexibility when it comes to managing growth.
In the decade since its own financial crisis, Asia has undergone a radical transformation. The crisis forced countries to confront structural weaknesses, implement market reforms and promote the private sector. Prudent economic management has delivered strong growth and stable currencies. The result today is a region that has re-discovered its dynamism. In areas such as manufacturing, technology and outsourcing, many Asian companies are leading the way. An empirical test has also showed in Figure 1 the historical GDP growth performance of Asian countries (excluding Japan), have been outperforming the developed economies.
Asia’s share of the global GDP is on the rise, and the shares of a group of developing Asian countries is already ahead of both the U.S and Europe. The current trend of world GDP is shifting eastwards, and will continue for the medium to long term, as can be seen in the proportions of world GDP by region Figure 2. Emerging market and developing economies are forecasted to represent approximately 69% of the world GDP by 2050, with developing Asia specifically forecasted to represent 49%. Asia’s growth projections give a compelling picture of the region’s long-term viability in both equity and fixed income markets.
Investing in the Asia-Pacific Region
Figure 1: Real GDP Growth
Investing in the Asia-Pacific Region
Figure 2: Composition of World GDP
Sectorial Growth
Vertical industry analysis identifies a few sectors believed to be major catalysts for future GDP growth. The designated industries which coincide with the potential, future long-term growth prospects are related to, Information and Communications Technology, Financial Services, New Age Retail and Green Technology. In relation to regional analysis, led by China, the Asia-Pacific will be the leader in these sectors, due to governmental expenditure and policy initiatives.
In addition, the ongoing Industrial Revolution 4.0 is also one highly-correlated factor taken into consideration by companies in their investment decisions. The Fourth industrial revolution which is built on the third, known as the digital revolution, has been occurring since the last century. It is characterized by a fusion of technologies which is blurring the lines between the physical, digital and biological spheres. The velocity of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential pace.
Many industries have already engaged with the introduction of new technologies that create entirely new ways of serving existing needs, significantly disrupting industry value chains. The disruption is also flowing from agile, innovative competitors who gain access to global digital platforms for research, development, marketing, sales and distribution. This can oust well-established incumbents faster than ever by improving the quality, speed, or price at which value is delivered.
A key trend is the development of technology-enabled platforms that combine both demand and supply to disrupt existing industry structures, such as those within the “sharing” or “on demand” economy. These technology platforms, rendered easy to use by the smartphone, convene people, assets, and data – thus creating entirely new ways of consuming goods and services in the process. In addition, they lower the barriers for businesses and individuals to create wealth, altering the personal and professional environments of workers. These new platform businesses are rapidly multiplying into many new services, ranging from laundry to shopping, from chores to parking, from entertainment to travel (Schwab 2016).