– News Corp and Softbank step up European activities

Softbank, Japan’s leading Internet investor, and Rupert Murdoch’s News Corp are themselves weaving a tangled worldwide web of cross shareholdings as they look to step up their Internet investment activities in Europe.

News Corp is creating a $650 million (e670 million) venture fund for Internet companies outside the US. It will provide $250 million of epartners II’s capital alongside $200 million from Softbank Corp. The balance will be drawn from other sources including Jacob Rothschild. In turn epartners II will commit $150 million to Softbank UK Ventures, which will focus on Internet and wireless deals in the UK and will be managed by ePartners, which is headed by chief executive Mark Booth.

A further $250 million from the epartners fund will be channelled into eVentures, the 50:50 joint venture between News Corp and Softbank which is propagating US Internet companies in other English-speaking markets.

The more astute reader by this point will have worked out that, effectively, epartners II will have only only! $250 million at its disposal to take direct minority holdings in Internet-related companies. Enough to last until, say, October 2000, judging by current spend and burn rates?

Its predecessor fund was set up last summer with $350 million and has made ten investments to date, including Buy.com and Eyestorm.com. Despite portrayals of Rupert Murdoch as a net sceptic during the first flush of market e-mania, News Corp has increased its Internet venture exposure to some $1 billion in less that two years.

Softbank, meanwhile, is moving ever more aggressively into the European Internet market on its own account with two funds totalling $1 billion. The $450 million Softbank UK Ventures fund will draw $250 million directly from Softbank alongside the $150 million from epartners II (itself, as already stated, backed by Softbank).

Softbank’s new $550 million continental vehicle, Softbank Europe Ventures, will be backed to the tune of $100 million by Vivendi, Softbank’s existing joint venture partner in @viso, a continental counterpoint to eVentures. Softbank’s commitment to Europe Ventures is $400 million, leaving just $50 million to be raised from third-party investors. Both the new Softbank funds will look to exploit developments in wireless applications, a field in which Europe currently leads the US and Japan. Eric Hippeau, head of Softbank International Ventures, will initially lead the management team for Softbank Europe Ventures pending the recruitment of a dedicated manager.

Softbank, which has already ploughed an estimated $3 billion plus into more than 300 Internet-related companies mainly in Japan and the US in March announced plans to invest as much as $5 billion more worldwide (including the $1 billion of European funds) over the next year and a half.