Malaysia's OSK Ventures International and Affin Hwang Investment Bank have launched Pothos Fund I, their first dedicated venture debt fund, targeting high-growth companies across Southeast Asia.
Pothos GP Sdn Bhd, a subsidiary of OSKVI with strategic equity participation from Affin Hwang, will manage the vehicle. It has a three-year investment tenure and is aimed at sophisticated investors. The firms said the fund is intended to give those investors access to venture debt, an asset class that has traditionally been more available to large institutions. The size of the fund was not disclosed.
The fund will target revenue-generating businesses with proven models, strong management teams and predictable cash flows that are preparing for regional expansion. Unlike traditional venture capital funds that focus mainly on equity, OSKVI and Affin Hwang said Pothos Fund I will use a structured venture debt strategy and provide debt-equity hybrid financing.
Returns are expected from contractual income streams, downside protection features and selective equity participation. OSKVI said the financing is meant to help companies extend their operational runway, accelerate expansion and reduce dilution for existing shareholders compared with raising further equity.
Amelia Ong, Chief Executive of OSKVI, said in a joint statement: "As companies mature, their financing needs evolve, and venture debt provides a valuable option alongside traditional equity funding."
Hanif Ghulam, Chief Executive of Affin Hwang, said venture debt is playing an increasingly important role in providing growth companies with capital for expansion while minimising equity dilution. The investment bank is contributing capital-markets expertise, private-market structuring, fundraising and distribution, and access to a network of institutional and sophisticated investors.
OSKVI, the Kuala Lumpur firm established in 2000 and listed on Bursa Malaysia, already describes itself as providing venture capital and venture debt to Southeast Asian companies seeking growth capital. It offers equity and debt funds for the region and says it focuses on B2B and enterprise technology. The firm said it has more than two decades of venture-investing experience and has invested in, nurtured and exited more than 50 technology and enterprise companies across Southeast Asia.