SAIF Partners, a Greater China-focused growth capital provider led by managing partner Andy Yan, has raised $1.1 billion for a new fund it expects to invest in late-stage opportunities over a four-year period.
Aside from Greater China, where 75 to 80 percent of the new fund will be deployed, SAIF is also investing in Korea and India.
The vehicle, Fund III, has already completed two deals in India, according to SAIF partner Brandon Lin – it invested $125 million for a 5 percent stake in the National Stock Exchange (half of which was funded from Fund II) and $5.5 million for a stake in an integrated telecoms service provider.
Fundraising was completed quickly. “We discussed the fundraising with our existing LPs in November and started talking to new investors in December,” Lin said. By the end of January, SAIF had raised more than half of the $1.1 billion total.
Several existing investors have increased their commitments to the latest fund, including Princeton University, Siguler Guff, Horseley Bridge Partners, AlpInvest and LGT, while new LPs include Harvard University, Robert Wood Johnson Foundation, Credit Suisse and Helsinki Pension Fund, Lin said.
Lin expects SAIF’s investment pace to slow down relative to previous funds. The firm intends to deploy $275 million to $300 million a year, as opposed to Fund II’s $643 million over two years. In 2006 alone, SAIF completed 24 transactions.
Lin said: “Our extremely strong proprietary deal flow led to our fast investment pace for Fund II even as we continued to significantly raise our investment standards. The quality of our portfolio companies was verified by our LPs during the fundraising process and the success and speed of our fundraising, with most of our large existing LPs significantly increasing their commitments.
As with previous funds, SAIF will continue to invest in the telecommunications, media and technology sectors, but is also keen to take significant minority stakes ranging from 20 to 45 percent in more traditional sectors, Lin added.
SAIF was thrust into the limelight when an investment in China, Shanda Interactive Entertainment, went public on Nasdaq in May 2004. The $40 million investment returned $520 million, or 13 times cost in 22 months, according to SAIF.
The firm started out in 2001 as part of SOFTBANK Corp, with Cisco Systems as the sole investor in the $400 million SOFTBANK Asia Infrastructure Fund. In 2005, the team gained its independence and raised $643 million for Fund II. Cisco remains an LP, but is no longer the largest investor in Fund III, while SOFTBANK, a GP in the first fund and an LP in Fund II, will not have an allocation in the latest fund.
The firm recently lost Joe Zhou, a high-profile Beijing-based partner who has been with the firm since 2001. Lin said the firm intends to add one or two partners to the team, and open a new office in Shanghai.
SAIF currently has seven partners across its offices in Hong Kong, Beijing, Hyderabad and Seoul.