Alibaba commits $100m to Yunfeng's China tech fund
Alibaba Group has committed $100 million to a fund being raised by Yunfeng Capital, a PE firm set up by Alibaba founder Jack Ma.
Yunfeng, established by Ma and David Yu, founder of Target Media, is raising around $1 billion for its second fund. A first close of $600 million came last year.
Alibaba's LP commitment is disclosed in documents filed as part of the Chinese e-commerce giant's IPO. They also offer insight into Ma's relationship with Yunfeng. He owns a 40% interest in several entities that are the GPs of funds sponsored by the PE firm. Furthermore, Ma has volunteered to donate all distributions he may receive through these entities to the Alibaba Foundation, a private charity set up by Alibaba.
It is unclear whether or not Ma also has direct interests in the funds - such as through the GP commitment to the funds - and, if so, what happens to the proceeds of these investments.
Alibaba sees the link to Yunfeng as beneficial to its business, the LP commitment to the fund having "formalized an institutional relationship" with the PE firm. "We expect that, through its expertise, knowledge base and extensive network of contacts in private equity in China, Yunfeng Capital will assist us in developing a range of relevant strategic investment opportunities," the filing said.
The two groups have previously jointly invested in online video provider Youku Tudou and pharmaceutical data provider CITIC 21CN.
Yunfeng-managed funds have also invested in Alibaba itself. In September 2011, Yunfeng and several other investors paid $1.6 billion for a 5% stake in the company, providing liquidity to Alibaba staff that held equity interests in the company. This investment likely came from Yunfeng's first fund and associated vehicles.
The debut fund was raised in 2010, sourcing capital from around 20 well-known Chinese entrepreneurs - known as co-founders, although they are passive investors.
In 2011, Yu said the firm had raised RMB10 billion ($1.5 billion) across two funds, one US dollar and the other renminbi. It is unclear how much capital went into each fund - or, indeed, whether Yu included separate accounts in his total - but AVCJ understands the US dollar vehicle had a corpus of $307 million.
Chinese online game developer Giant Interactive - whose chairman, Yuzhu Shi, is one of Yunfeng's passive co-founders - previously committed $50 million to limited partnerships managed by the PE firm that invested in Alibaba. The investment was announced in September 2011. Giant sold its interest to Tiger Global in February for $199 million.
Giant Interactive has also pledged $20 million to Yunfeng's second fund.
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