JAFCO Planning Third Fund

BEIJING – JAFCO Asia, the Hong Kong private equity firm, which currently manages about $300 million of assets in two technology venture funds, is preparing to raise a third venture capital fund, says co-founder Vincent Chan. Chan tells PE Week that his group will begin marketing JAFCO Asia Technology Fund (JATF) III at the end of 2005, mostly in Europe and the Middle East.

Chan says that the fund size has not been set yet.

Talking about JAFCO Asia’s first two funds, Chan says that JATF I – a $178 million 2001 fund that was sponsored by JAFCO and Japanese corporations – “made a lot of mistakes.” But Chan notes the fund had several solid portfolio investments, such as 3721 (which was sold to Yahoo for $121 million), as well as BCD Semiconductor, ODYSYS and Photonic Bridges.

Chan says that his firm was fortunate to close the first fund just as the Internet bubble was about to burst, since it allowed the firm to avoid the disastrous investments of other ’01 vintage funds. JATF II, a $100 million fund, of which JAFCO was again the largest LP alongside a broader group of Japanese corporations and high net-worth investors from Hong Kong and Taiwan, is more than 50% invested.

Chan notes that JAFCO has become one of Korea’s top VCs, having invested in more than 20 deals in Korea from the first two funds. Similarly, the firm has made 19 investments in China. JAFCO has three managing directors (including Chan) and 17 investment professionals.

JAFCO was founded in 1973 in Japan with the backing of Nomura Securities and is listed on Japan’s Over the Counter Exchange. Nomura remains the largest shareholder of the firm’s stock, with around 38% of its shares.

JAFCO is widely known in the United States, mostly because of the firms that have spun out from it. James Wei left JAFCO in 1985 to co-found Worldview Technology Partners, and Barry Shiffman left JAFCO for Globespan Capital Partners in 1995.

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