TPG partners with SoftBank Ventures Korea for $300m China fund
(Dianne Feinstein’s husbund, Richard Blum is principal of TPG)
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New fund will target early-stage technology companies
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Henny Sender in Hong Kong and Kana Inagaki in Tokyo YESTERDAY Print this page0
Softbank’s South Korean venture unit has partnered with TPG, the San Francisco-based private equity firm with a long history in Asia, to launch a $300m venture fund targeting China.
The fund will focus on Chinese start-ups and comes as private equity funds on both sides of the Pacific try to reinvent themselves to focus on technology. The new fund will be formally announced in a press briefing in China this week.
Naver, the South Korean internet search giant that owns Line, the messaging app, will be a big investor in the new fund.
TPG, whose growth equity team will manage the fund, “has never played in that space before”, said one person familiar with the matter, referring to Chinese start-ups. “It is not so core that we would do it by ourselves.”
A spokesman for TPG confirmed the details of the fund, but one senior executive said TPG had decided “not to publicise it outside China”.
Softbank Ventures Korea said the fund would “signficantly boost” its involvement in Chinese early-stage companies in “internet, technology and media”. “We are witnessing an incredible quality of new investment opportunities,” said a spokesperson.
TPG came into contact with Masayoshi Son of SoftBank when he bought into Uber. TPG executives, like others in the industry, have been ambivalent in the past about SoftBank, suggesting that its $93bn Vision Fund generally overpays for its stakes in young tech companies across Asia.
Staff at private equity firms such as Warburg Pincus or General Atlantic, which have developed an expertise in providing growth capital for young tech companies in Asia, say they hope to sell to SoftBank rather than to partner with that Japanese firm. Often, they add, that is because SoftBank offers higher valuations than those available in the public markets.
Given that SoftBank Ventures Korea does not have a presence in China, the chance for any conflict of interest with the new fund is minimal, said one person familiar with the matter.
News of the new fund comes at a time when many of the biggest investors both in China and the US have raised or are raising record amounts of money to put in the region, partly in response to Softbank’s size.
TPG itself has almost completed fundraising for its seventh Asian fund, which will probably top $4.5bn, while KKR has raised over $9bn and Hillhouse Capital over $10bn.