News - Vision Knight Capital

Alibaba.com Ex-Chief's Firm Vision Knight Closes $250M Fund, Weighs Second

March 22, 2013,

Vision Knight Capital Partners, a Chinese firm set up by David Wei, the former chief executive of Alibaba.com Ltd., has closed a maiden fund at $250 million to invest in online commerce, retail and Internet companies, according to Mr. Wei.

The firm now is looking to raise a second fund and expand its institutional investor base. The first fund was 60% backed by family offices and individuals, and then 30% by institutional investors, with the firm's founders investing 10% of capital. The firm plans to raise the amount of investment from traditional limited partners to 60% to 70% for the new fund, said Mr. Wei. The size of a second fund has yet to be determined, with Mr. Wei noting that it will be "back in the market in 2014."

Investors in the first fund, which had a target of $200 million to $300 million, included Hong Kong-based telecommunications company PCCW Ltd ., which committed $25 million, and one of China's richest men, Jack Ma, who is the founder, chairman and outgoing CEO of Alibaba.com 's parent company Alibaba Group Holding Ltd . Mr. Wei declined to comment on how much Mr. Ma invested.

Although the first fund has only recently closed, Vision Knight started investing from it in September 2011 after an initial close. With an average ticket size of $20 million to $30 million, the firm has invested in six companies, with another two in the pipeline. Existing portfolio companies include Chinese wedding photo company Golden Ladies Photo and PPS.tv, an Internet provider of television programs.

While the firm is setting its sights on a second fund, other general partners are struggling to attract commitments. Limited partners are increasingly reluctant to invest in Chinese funds because of a lack of returns and realizations, largely due to fewer exits because of closed markets for initial public offering.

This hasn't put Vision Knight off from returning to the market. "When IPO opportunities reduce, trade sales will increase," said Mr. Wei. "Two of our portfolio companies have already been approached. A slowing economy means that public companies are looking at private companies to help expansion."

Mr. Wei left Chinese e-commerce company Alibaba.com in 2011 following an internal investigation concerning fraudulent sellers on its sites. Mr. Wei was never implicated in any wrongdoing. He said that his time at Alibaba.com -- five years as CEO -- has helped him to understand the Internet, ecommerce and consumer sectors.

He previously worked as the CEO and chief financial officer for do-it-yourself retailer B&Q China. He founded Vision Knight in 2011, alongside Daming Zhu, who used to work at Shanghai-based private equity firm DT Capital Partners .