 |
The Tiger Capital Partner Fund 1 |
|
Asia and in particular China has seen enormous
growth in Foreign Direct Investment both in terms of Infrastructure
projects as well as Private Equity/Venture Capital funding for Asian
businesses, particularly in the Technology, Media and
Telecommunications (TMT) sectors. In 2004 over $1.2Bn of Venture
Capital/Private Equity money was invested in Mainland China
businesses with over 60% invested in the TMT Sector (source CVCF
2004). |
|
One of the key issues facing the VC and Private
Equity Firms is how to gain an exit from their invested companies
and achieve a worthwhile return. Of the $802M realised in exits from
investments in 2004, almost 70% came from the overseas listing of
only 5 companies, the vast majority of exits came via the trade sale
route and realised less than 25% of the total exit proceeds (source
CVCF 2004). |
|
Although there is a proliferation of VC and Private
Equity investment funds concentrating on investments in China and
other Asian markets very few, if any, are specifically geared
towards achieving a suitable exit in the short to medium term, ie
within 12 to 18 months from investment. Tiger is establishing a
specialist Investment Fund, seeking commitments of up to GBP50
Million, to complement the existing investment groups in the Asian
region by providing Seed IPO finance for SME businesses in the key
markets of China, Korea and Japan. |
|
Tiger Capital Partners Fund 1 (the Tiger Fund)
is designed to enable these businesses to obtain a listing via an
IPO on one of the 3 London Capital Markets. The companies targeted
by the Fund are in the growth stage of their development, so an IPO
on the junior AIM market would be the preferred exit route for the
funds investments. The Fund acquires a minority equity stake in each
business and assists each one to execute an IPO, normally within 18
months of the investment. |
|
|
|
Asian Investment Targets |
|
The Tiger Fund targets investment in businesses
which either:
|
|
 have already received previous VC
Investment |
|
have already invested and developed Proven
technology |
|
are ready to pursue an IPO as part of a phased
exit strategy |
|
have international business or international
growth potential |
|
This means that in the vast majority of cases the
Tiger Fund will be considering investment in proven business with
proven business models and strong growth prospects, which combine to
increase the probability of a successful IPO. |
|
|
|
London Exits |
|
The Tiger Fund represents an excellent
opportunity for both individual investors as well as existing VC and
Private Equity funds to participate in what is to be a growing trend
amongst Asian SMEs to seek a listing in London. The US markets have
become compliance heavy and as a result many European companies are
de-listing their ADRs simply because of the financial burden let
alone the potential liabilities for non-compliance. |
|
With the legislation introduced under the recent Sarbannes
Oxely Act (SOX) complicating and increasing the cost of
the IPO process for NASDAQ and NYSE, coupled with the lack of
investor confidence and red tape associated with the home grown
exchanges in China, Hong Kong and Japan, exits from investments in
SME companies in the region have tended to come from trade sale or
merger opportunities. These opportunities generally do not provide
the same returns as the VC firms would expect from successful IPOs
of their invested companies, although they can be profitable. |
|
Londons Capital markets and in particular AIM,
with its flexible rules and regulations, is an ideal platform to
achieve an IPO exit for SME companies at potentially much higher
valuation than that achieved via trade sale. It also enables the
company to avoid the potential post-IPO limitations of a domestic
Asian market. London is one of the most liquid capital markets in
the world with over US$3 Trillion of securities traded last year
alone, almost 3 times that of New York. That coupled with the
relatively relaxed regulation of the AIM market should make London
the focus of many more Asian companies, particularly those with a
globally applicable product or business model. In essence the same
companies which the Tiger Fund will address. |
|
Tiger Capital Partners Funds represent a
complementary channel for Asian VC firms and Investors to take
advantage of our existing advisory services as well as access to our
Funds to effect a suitable exit strategy from their investments. |
|
If you want more information about Tiger Capital
Partners Fund 1, please contact
us. |
|
