TOKYO – When a private equity firm is looking to raise over $1 billion, it generally makes scores of phone calls and puts together a lengthy roster of limited partners – unless that firm is Softbank Corp.
In late January , the Tokyo-based company officially announced that its recently-launched Asia Infrastructure Fund had raised $1.05 billion – from just one investor. The deal, made with Cisco Systems Inc., is part of a larger agreement whereby Cisco is purchasing most of Softbank’s share of Cisco Systems K.K. for approximately $275 million. In addition, Cisco will invest an additional $200 million in Softbank.
“All of the deals are linked,” said Gary Rieschel, managing director at Softbank and a member of the new Asia Infrastructure Fund’s investment committee. “For me, this all goes back to Cisco’s joint venture with us in Japan so it’s a bit of deja vu.”
He added that Cisco does not have formal veto power over potential investments, but that the tech giant will be an integral part of the new operation in terms of sorting out deal flow and providing technical advice.
While Cisco is currently the new fund’s sole LP, Softbank is in the midst of pitching possible LP stakes to other strategic players. The fund does not have a formal target capitalization, but the final figure is not expected to exceed $2.1 billion.
The new vehicle does not yet have a formal investment team on the ground in Asia, but Rieschel and company plan to begin making investments almost immediately. A managing director and additional staff are expected to be named within the next few months.
Approximately half of the investments are targeted at Greater China, with the remainder to be split among Japan, India and Korea. A number of those deals will likely be co-investments with Softbank funds already operating in Asia.
“There are only a handful of players in Asia who are capable of working both sides of the Pacific,” said Jim Timmons, managing partner with NIF Ventures. “They’re a competitor, but I’ve got to tip my cap to them.”