SAN FRANCISCO – Proving once again that venture capitalists rarely correlate geopolitical tensions with economic instability, Walden International recently raised a $1 billion global fund that is expected to make significant investments in Asia.
Although the early-stage vehicle was technically closed a few days before the aircraft collision between a Chinese fighter jet and a U.S. spy plane, fund investors are nonetheless confident that it will not need to alter its investment strategy.
“Walden has been investing in Asia since 1984,” said Kevin Delbridge, a managing director at HarbourVest Partners. “Anyone who studied history knows there are ups and downs. It will also be diversified throughout the region, with only part of it in China.”
Delbridge, whose firm is a limited partner in the new fund, went on to say that Walden International’s fifth fund, Pacven V, will be deployed over three to four years, over which time he believes the current conflict will be long forgotten.
The new fund will be targeted at the communications, software, Internet, semiconductors, electronics, implementation services and life sciences sectors.
Originally marketed with a $750 million target capitalization, Pacven V had $1.5 billion worth of interest, said Daniel Faizullabhoy, a general partner at Walden. The San Francisco-based company turned away some of the excess money because it wasn’t sure how much it could put to use in this unpredictable market. “The limited partners felt comfortable with a billion,” Faizullabhoy added.
This fund follows Pacven IV, which raised $328 million in 1998 and is now fully committed.
Already Signed Up
A number of the LPs involved in the transaction will also take seats on the new fund’s advisory board, including HarbourVest, CommonFund Capital, Harvard Management Company, Massachusetts Institute of Technology, NIB Capital Private Equity, Pantheon and Verizon.
Other participants included Adaptec, where Faizullabhoy was a general manager, AOL Time Warner Ventures, Credit Suisse First Boston, DBS Bank, Goldman, Sachs & Co., GIC Special Investments Pte Ltd., Morgan Stanley Dean Witter, Robertson Stephens’ BAYVIEW 2000, Sumitomo and Temasek Holdings.
In all, 15% of the collected capital came from European LPs and 13% from Asian LPs. “We diversified our investor base for long-term options,” Faizullabhoy said.
One-third of the $1 billion will be put into Asia, one-third into the U.S. and the remaining third into hybrids that span multiple geographies. Thus far, the fund has reviewed six deals, but has not made final decisions on any of them.
The fund will likely back approximately 50 portfolio companies, with initial investments between $5 million and $7 million leading to total life-span investments of between $15 million to $18 million.
Walden International is an affiliate of Walden VC, which focuses on media investments, and Walden Israel, which invests in Israeli companies. It has offices in the U.S., Taiwan, Singapore, the Philippines, Malaysia, Japan, India, Hong Kong and China.