DBS and Temasek enter deal to launch US$500M growth-stage debt financing platform

DBS signage at the DBS Marina Regatta dragon boat race on 2 June 2019.DBS signage at the DBS Marina Regatta dragon boat race on 2 June 2019.

Southeast Asia’s largest bank DBS and Singapore’s state-owned investment company Temasek Holdings have entered a deal to launch a US$500 million growth-stage debt financing platform to be called EvolutionX Debt Capital, the two companies said in a press release Friday.

EvolutionX, which will be based in Singapore, will provide non-dilutive financing to tech-enabled companies, with a focus on China, India and Southeast Asia, the statement said. Sectors targeted will include financial services, consumer, healthcare, education and industrial development.

Tan Su Shan, group head of institutional banking at DBS, said the EvolutionX investment would let her bank play an integral role in financing Asia’s future unicorns, or companies valued at US$1 billion or more.

“As a purpose-driven bank, we believe in investing in solutions that democratise financing access to companies of all sizes and stages of development,” she said in the statement.

“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,” Tan said. “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.”

Rohit Sipahimalani, chief investment strategist at Temasek, said the company aimed to use capital to stimulate innovation and growth.

“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,” he said in the statement.

EvolutionX will be led by joint interim CEOs Amit Sinha, who is group head of telecoms, media and technology at DBS’s institutional banking group, and Aftab Mathur, director of investment (innovation) at Temasek, with a full-time CEO to be appointed within a few months, the statement said.