ARQ Capital ready to fund mid-size firms
08 June, 2022
ARQ Capital Partners, a local venture capitalist for medium-sized firms, said it was able to raise some P1.5 billion in funding, which it will use to bankroll some 50 enterprises over the next two years.
The company said it is also raising additional capital from development institutions to fund its investments.
ARQ founding partner and CEO Edmund M. Solilapsi in an online news briefing said there are only a few “smart capital investors” in the country today and that this space has yet to be institutionalized. He said a number of enterprises are encountering capital funding hurdles due to more stringent bank requirements.
“The Philippines continues to be second to the lowest in ASEAN [Association of Southeast Asian Nation] in terms of private sector credit as a percentage of gross domestic product, domestic credit to private sector by banks and domestic credit provided by financial sector,” Solilapsi said.
He said the country’s financing market is dominated by banks and non-bank financial institutions, which are primarily passive capital providers and predominantly asset-backed.
He said venture capital firms focus on early-stage startups and tech-driven companies while private equity investors and strategic investors focus on larger investments and more mature enterprises.
This environment leaves little wiggle room for small and medium-sized enterprises to find the right capital partner to fund their growth.
ARQ said it has invested some P1 billion in 33 firms since 2016 through its ARQ SME Business Development Co. and through co-investment partners.
The company said it plans to fund 10 more medium enterprises by year-end to add to its current portfolio, which now stands at 22 medium firms.
ARQ co-founder and managing partner Abigail D. Tan said the market base for capital investors could be worth over P25 billion.
Tan said this is the equivalent of 20 percent of 4,800 medium enterprises in the Philippines that may have high-growth potential, which is one of ARQ’s fundamental requirements. “We typically support entrepreneurs requiring more than P25 million during their companies’ high-growth phase, especially those with revenues hitting between P100 million to P500 million,” Tan said.
As the country rises from the pandemic, she said ARQ will likely support companies engaged in the so-called building blocks of transformation that drive economic growth.
These include those in the industries of technology, telecommunications, financial services, digitization and digital payments, renewable energy, food and agriculture, healthcare and affordable housing.
“As partners, we primarily assist companies in crafting a sound business plan and financial strategy that in the end should unlock further capital raising or a potential exit,” Tan said.
ARQ was founded in 2014 by Solilapsi and Tan to address the underserved financial needs of the small and medium enterprises.
In 2019, Manuel Paolo A. Villar, president and CEO of Vista Land and Landscapes Inc., joined ARQ as partner and member of its Investment Committee.
Read Article Here: ARQ Capital ready to fund mid-size firms | VG Cabuag (businessmirror.com.ph)