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Thursday, March 02, 2000
Chase Capital's US$1 billion venture fund for Asia
Founder and managing general partner Jeffrey Walker told CNET Malaysia the new fund called Chase Capital Partners Asia will focus on investing in Japan, Hong Kong, Singapore, Korea, China, Taiwan and to a lesser extent, Malaysia, the Philippines, Indonesia and Thailand.
"The Asia Pacific region is definitely the greenfield place for foreign venture cap funds to shop around and seed new ideas, particularly in Internet-related investments. We expect many private equity funds to enter Asia soon, probably targeting more developed economies first. We are also targeting greater China given its huge market potential in the long run," he said in reply to a CNET Malaysia query.
The Asian fund, which had its first close of US$521 million last May, is headed by Andrew Liu, the former president and managing director of Morgan Stanley Asia.
Walker said CCP was ideally positioned to invest in Asia because of its vast reach and extensive industry expertise. "We have more money available to drive Internet investments in Asia than almost any other private equity group," he said.
He said CCP was on the lookout for Asian companies involved in Internet infrastructure, services and enabling-software. "In e-commerce, we are especially interested in the B2B plays given the large manufacturing base in Asia. We are also looking to leverage from CCP's large Internet portfolio from other parts of the world and sponsor their successful business models in Asia."
CCP has invested in some of the hottest Internet deals including community Web site GeoCities, now part of Yahoo! Inc, Latin American portal StarMedia Network Inc, and Nasdaq-listed Web consultant iXL Enterprises Inc.
"Many of these are good models for what we want to do in Asia. There needs to be a great deal of customization for such Internet business models to be successful in a local environment because of language, cultural, or business process differences in Asia," he said.
The unassuming Walker cut his first deal at the age of 28 as a staff of Chemical Bank and made US$6 million by buying and selling a radio station. He founded CCP in 1984, and has parlayed it into one of the largest global private equity funds and the biggest unit under the New York-based bank Chase Manhattan Corp.
CCP currently has US$15 billion of assets under management and has completed over 900 deals in a wide variety of industries worldwide. It is also one of the largest venture capital (VC) investors in IT and the Internet globally with over 80 companies in its portfolio.
In Asia, CCP has been active via investment vehicle Chase Asia Equity Partners (CAEP) for more than six years and has taken 400 companies under its wing.
Indian Internet companies Microland Group and PlanetAsia.com Ltd, both founded by Pradeep Kar, and software developer e-Capital Solutions India Pte Ltd were some of the early beneficiaries of CCP through the Indocean Chase fund.
Walker said CCP will also be leveraging on the network of technology investment bank Chase H & Q , formerly Hambrecht & Quist Group, which Chase purchased in a US$1.35 billion cash deal concluded December.
H & Q is best known for its role in taking healthcare and technology companies public--a market that has exploded in recent years.
Walker said he doesn't believe that large American venture cap funds are too US-centric and have been slow in coming to Asia. "Many VC funds have chosen to focus on the US domestic market because that's where you see the leading edge of new technologies and new Internet business models. Besides, the US market is a very large market by all measures. Different VC funds have different investment strategies and they can all be successful."
Walker, however, called for "closer attention" by global VCs in the Internet sector in their chosen geographic locales.
He said that Asian economies are coming out of the recession and rapidly getting on the internet bandwagon. Internet user growth rates in Asia Pacific outside Japan are also growing at compounded annual growth rate of 40 percent compared to 28 percent worldwide, according to an IDC report.
The veteran fund manager cited another pull factor for VCs to come would be "multiple successful Internet IPOs". "There is clear evidence that tremendous value is created from risk capital successfully combined with entrepreneurship. Capital will get attracted to where it is efficiently put to work," he said.
Walker expects more new entrepreneurs of Asian origin the likes of Sabeer Bhatia (Hotmail) and Jerry Yang (Yahoo!) to emerge in the coming years who will make a global impact.
"Asians are as well-positioned as any others in shaping and leading the new economy in the coming century. The Internet is a truly global industry. Regardless of nationality and origin, anyone can be successful in it," he said.
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