DBS Bank and Temasek Holdings have, on July 30, entered into an agreement to jointly launch a US$500 million ($676.9 million) growth stage debt financing platform.
The partnership is a natural extension and segue to both DBS and Temasek’s existing early-stage debt initiatives and investment activities.
Called EvolutionX Debt Capital, the platform will be headquartered in Singapore and will provide non-dilutive financing to growth stage technology-enabled companies across Asia, with a focus on China, India and Southeast Asia.
The platform will harness on Temasek’s investment experience and DBS’s global banking networks. It will be led by joint interim CEOs Amit Sinha, group head of telecoms, media and technology, institutional banking group at DBS and Aftab Mathur, director, investment (innovation) at Temasek, before a full-time CEO is appointed in the next few months.
According to a joint statement put out by DBS and Temasek, there is “significant opportunity” in the growth debt capital space. EvolutionX will put its money in opportunities arising from an increasingly digital economy across sectors such as financial services, consumer, healthcare, education and industrial development.
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“The investment in EvolutionX provides an opportunity for us to play an integral role in nurturing and financing the growth of Asia’s future unicorns, while forging partnerships and ecosystem opportunities with these high-growth technology-enabled companies,” says Tan Su Shan, DBS’s group head of institutional banking.
“Growth debt is fast emerging as an alternative source of financing for high-growth technology companies that traditionally only raised equity as a source of capital. Apart from helping founder entrepreneurs avoid dilution of share equity in the company’s initial stages of development, growth debt also serves as a complementary tool to tide these companies, which are often cash strapped, through unexpected market and economic headwinds by extending their cash runway,” she adds.
“Technology and digitisation will have a pervasive impact across many sectors, and will continue to transform our economies and communities,” says Rohit Sipahimalani, Temasek’s chief investment strategist.
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“We’re therefore pleased to partner with DBS to provide a meaningful alternative for technology-focused growth companies in Asia that may face debt funding needs between the venture debt and late stage debt financing phases. With EvolutionX, we can help provide companies and entrepreneurs the support they need as they continue to scale and expand.”
As at 12.25pm, shares in DBS are trading 19 cents higher or 0.6% up at $30.69.
Photo: Bloomberg
