Malaysia's Navis plans new $2 billion fund

By Kevin Lim and Sahar Ahmed

SINGAPORE (Reuters) - Navis Capital Partners, a Malaysian-based private equity firm, plans to launch a new $2 billion fund this year that will invest in small and medium-sized companies in South and Southeast Asia, its co-founder Nick Bloy said on Wednesday.

Navis, set up in 1998 by former Boston Consulting Group executives, also expects to liquidate its first fund this year with shareholders earning an internal rate of return of about 40 percent, Bloy said at the Reuters Hedge Funds and Private Equity Summit in Singapore.

Bloy said Navis would launch its next fund, called Navis 6, in a few months with a size of "plus-minus $2 billion".

"So if we announced it in June, the closing of the fund will probably be in January or February next year," he said, noting that it typically takes 6-7 months for a private equity fund to get off the ground.

Navis' area of focus include "anything associated with the rise of the Asian consumer," which meant investing in fast food chains, fitness centers and possibly international schools.

Such businesses could grow rapidly in emerging Asia as the markets were young and dynamic, unlike in the West where market shares were more entrenched.

Bloy said a firm's market position was important to private equity investors as potential buyers -- for example, foreign multinationals expanding into Asia -- would typically buy only the number one or two domestic player and pay a huge premium.

For instance, Navis sold Drypers, a maker of baby diapers, for an enterprise value of $94 million in 2004 to yield shareholders of its Navis I/II fund an international rate of return of 105 percent per annum.

Navis I/II -- the firm's first private equity fund -- will cash out completely this year.

"Branded, sustainable retail has got a lot of growth to go as a concept as people become more brand conscious and have money to spend," he said.

The other areas that Bloy identified included branded auto lubricants and logistics.

REGULATED SECTORS

Bloy added that Navis generally shunned government-regulated sectors, as Asian policy-makers were generally more intrusive than their counterparts in the West.

Navis currently manages about $2 billion in assets including majority stakes in fast food companies such as KFC in Hong Kong, Nirula's in India and Dunkin Donuts in Thailand.

Its other investments include security and risk management firm Hill & Associates; Malaysia's largest outdoor advertising company Big Tree; and Celebrity Fitness, which was one of the largest operators of fitness centers in Indonesia and Malaysia.  Continued...