Delta Debuts $500M International Fund

Deciding to scrap its plans for a $50 million Philippine-focused venture fund in favor of a more ambitious $500 million vehicle, San Francisco-based Delta Venture Partners may close its debut investment fund as soon as Dec. 1.

Although Delta’s revised offering will be a diversified, international investment vehicle that may include Treasurys, government and commercial paper, real estate and intellectual property assets, up to 70% of the fund may be allocated to private equity investment, said Hal Spice, founder and managing director of the firm.

A $50 million slice of the private equity allocation will be invested in the Philippines; while up to $50 million will be invested in China, Hong Kong and Taiwan. Another $50 million is earmarked to fund early-stage technology companies in Israel and finance their entry into international markets; and a $150 million pool of capital is reserved for U.S. private equity investment.

Already, one Manila-based investor group representing a number of Filipino individuals and families has signed an LP agreement and a memorandum of understanding with Delta. Although they have been prepared to go forward with the $500 million deal since September, Spice said, legal and political complications inside the Philippines have delayed the final close.

Indeed, the Philippine venture initiative is a conciliatory gesture meant to circumvent those problems.

“The hurdles we have to jump through are both on the U.S. front – it’s a large amount of money coming in through a wire transfer – and because the investors live in the Philippines, we’ve engaged an attorney there and are negotiating with the Philippine government to close the fund,” Spice said.

In its current incarnation, the $50 million earmarked for the Philippines looks much like the original offering memorandum Delta Venture Partners shopped to investors in April.

It includes $5 million paid out over a five-year period to fund the development of an advanced software technology lab, a $3 million public-private partnership to develop a technology ecosystem there that includes the financial, administrative, legal and technical backbone for technology development, and an early-stage fund focused on software, aquaculture and agriculture investments.

“We’re negotiating a settlement with the Philippine government. For allowing the transfer to go through, this is what the government gets out it,” Spice said.

If the deal can be inked by early December, and the funds transferred soon thereafter, Delta expects to begin investing by year-end.

Formed in 1981, Delta Venture Partners evolved from a management and information technology consulting practice into an incubator-like operation in 1996. By 1999, the firm had morphed into a boutique investment bank specializing in securing capital from Asian financiers for U.S.-based start-ups.

Four Silicon Valley-based partners will co-manage the firm alongside one Manila-based partner.

Carolina Braunschweig can be contacted at: