Allegis Inks First China Deal

Allegis Capital is expected to announce this week that it’s taking part in a $4 million Series B investment in PRCDirect, a media research and telemarketing company in China. It is the firm’s first investment in the Asian country.

We’re “jumping into China with both feet with this investment,” says Barry Weinman, founder and managing director of Allegis.

The investment in PRCDirect comes from Allegis Capital IV, an $111 million fund. Weinman says he expects the firm to make as many as three new investments in Asia per year from that fund and others.

Many firms are looking more at China and the entire Asian region as a source of investments. What makes Allegis’ deal with PRCDirect unusual is that, unlike other venture investors who typically follow the lead of local firms when investing in China, Allegis took the lead on this deal alongside a domestic partner. Weinman says Allegis is able to do this because of its LPs and strategic partners, who have longstanding experience in China, such as Motorola, Siemens and Fujitsu.

Joining Allegis in the investment is Morningside, a Hong Kong-based private equity investor.

PRCDirect had previously raised $3 million from its founders, former executives of UTStarcom’s (Nasdaq: UTSI) executive team. The company, which is based in Guangzhou, but lists its headquarters in the Cayman Islands, has raised $7 million to date.

Weinman says that PRCDirect will use the latest funding to expand in China and provide set-top boxes in China, which will give users personal video recorder functions and measure consumer viewing habits. The latter function will supplement the company’s current phone-based research and telemarketing services in China.

Weinman says he was drawn to PRCDirect, in part, because it was founded by Jim Miller, a former UTStarcom vice president; and Robert Wu, a founder of UTStarcom.

Weinman says that the company already has a strong base of customers for its services among China’s TV broadcasters and telephone carriers, including both China Mobile and China Telecom.

Weinman also says that the company is already profitable, which he cited as another attraction for investing in it.