SAN FRANCISCO – H&Q Asia Pacific is raising a $750 million private equity fund mostly geared toward buying controlling positions in companies, with the remainder to be focused on more conventional venture capital investments in the region.
H&Q Asia Pacific Growth Fund III, L.P. initially will invest in the depressed economies of Thailand and South Korea, likely shifting its geographic focus to Taiwan, China and other Asian countries as opportunities arise, said William Seymour, senior managing director and chief financial officer.
About 65% of H&Q Asia Pacific Growth Fund II, L.P., a $278 million vehicle that closed in June 1996, was funneled into the firm’s controlling position strategy; Mr. Seymour does not refer to the practice as “buyouts” because H&Q’s investment approach does not involve leveraging. The fund’s remaining 35% backed a wide range of later-stage companies with about three years remaining before a public offering, he explained.
The new vehicle will follow the same strategy as its predecessor, which was fully invested at the close of 1998. Mr. Seymour would not discuss when the new vehicle, launched last September, is likely to close.
As Hambrecht & Quist’s Asian venture capital arm, H&Q Asia Pacific has nine offices in the region, and the firm is flexible regarding the geographic focus of its investments, Mr. Seymour said. Although Burma and North Korea are off limits because of their precarious political situations, the totalitarian regimes do not offer much investment opportunity to begin with, Mr. Seymour said. The firm also has avoided investments in Indonesia and Malaysia because of recent political unrest. H&Q Asia Pacific has made no investments in Laos, Cambodia or Vietnam to date, he said. Mr. Seymour declined to discuss the management fee or carried interest structure for the new vehicle and would not name L.P.s from previous funds.