UOB and Temasek to provide venture debt financing for Asian start-ups
(28 July 2015 – Singapore) United Overseas Bank Ltd (UOB) has entered into an agreement with Singapore investment company, Temasek to provide venture debt financing to start-ups in China, India and Southeast Asia.
According to an EY report on venture debt, the potential market size for venture debt in Singapore, China and India is US$2.2 billion (A$3.02 billion).
To help meet this demand, the UOB-Temasek joint venture will provide up to US$500 million in venture debt loans over the next five years to high growth, innovative start-up companies operating in sectors such as technology, consumer, healthcare, and clean technology.
As part of the agreement, UOB will acquire a 50 percent interest in InnoVen Capital (InnoVen), a wholly-owned subsidiary of Temasek.
Subject to relevant regulatory approval, InnoVen will be a UOB-Temasek joint venture.
UOB and Temasek will each commit up to US$100 million of paid up capital to the joint venture.
Eric Tham, managing director and head of Commercial Banking, UOB Group, said that the collaboration brings together UOB’s strengths and depth of experience in the small and medium enterprises segment, as well as Temasek’s expertise as an investor in some of the world’s top venture capital funds.
“Venture debt is important as it enables more of Asia’s best start-ups to develop into world-class companies.
“We can see this in China and India which have vibrant start-up ecosystems, while Singapore is establishing itself as the start-up hub of Southeast Asia,” Tham said.
“Our joint venture with Temasek will encourage an even more vibrant community of entrepreneurs in these markets by providing an alternative for these start-ups to accelerate the commercialisation of their business and to increase the valuation of their business without the need to pledge additional collateral or dilute their stake in the company.”
Ong Beng Teck, managing director, Enterprise Development Group, Temasek said, “Temasek is committed to building InnoVen and promoting growth of innovative companies by working with entrepreneurs and venture capitalists across Asia.
“This new pan-Asian venture debt financing initiative will seek the next generation of leading companies, providing the support they need to scale and succeed.”
InnoVen is India’s largest provider of venture debt to high-growth innovative companies.
In addition to the operations already established in India, the joint venture will establish subsidiaries in Singapore and China in the coming months to offer venture debt to fast-growing innovative companies in these markets.
Subscribe