SAIF to raise new China fund in the fall

Hong Kong-based venture firm SAIF Partners is planning to raise a second fund, less than one year after closing on SB Asia Invested Fund II with $650 million.

Partner and General Counsel Brandon Lin told PE Week that he expects SAIF to raise a new fund by the fall. The firm’s second independent fund will invest in about 30 companies, much like the group’s first fund, with most of the deals occurring in the telecommunications, media and technology sectors. Lin says the firm is also “enthusiastic about gaming, blogging and online shopping.”

SAIF raised fund II after Lin and his co-founders split off from Japan’s Softbank to form the independent firm. Their first fund remains the largest Chinese growth capital fund ever raised. Cisco Systems – which was the sole LP in Softbank – was SAIF’s largest LP, having committed $250 million. Other LPs included Softbank, Princeton University, Rockefeller Foundation, The MacArthur Foundation, Carnegie Mellon University and The Common Fund.

Though SAIF became independent from Softbank, having been affiliated with that fund was a plus. The SoftBank Asia Infrastructure Fund, a $400 million vehicle, had five portfolio companies launch IPOs. Most notable in that group was Shanda Interactive (Nasdaq: SNDA), which launched an IPO in 2004. SB Asia Infrastructure Fund I owned 25% of Shanda prior to its public offering. “Our exit from Shanda, at about the same time as when the firm began to raise fund II, returned 14x on our investment,” says Andrew Tan, president and managing director of SAIF.

SAIF has already committed more than half of the capital from fund II, having invested in 19 portfolio companies. The next fund will retain the same geographic focus, with 75% invested in China, 15% in Korea and India and 10% elsewhere in Asia.

Lin says that all eight of the firm’s founding partners will remain active in the second independent fund. But given the current rising valuations of China startups, Lin says that the firm is very interested in pursuing more Indian opportunities.