Fund focus: GSR fuels its global ambition

The firm started out as an early-stage VC investor and recently entered the growth-stage space under Go Scale Capital. Now it is targeting control deals on a global basis, raising $1 billion for the GSR Global M&A fund. Chinese billionaire Kin Ming Cheng, who has previously collaborated with GSR and Go Scale on other deals, is among the investors.

"We have raised $1 billion and have sufficient commitments to do $5 billion worth of deals," says Sonny Wu, co-founder of GSR Ventures and chairman of GSR Capital and Go Scale. "We haven't decided which deals to do yet, but we're targeting transactions that could be worth $5-10 billion."

There will be no more than three deals, each one worth several billion dollars. GSR will either buy companies or acquire minority stakes in sectors such as clean energy, bio-pharmaceuticals and life sciences, bulk commodity investment, traditional and internet finance, wireless communication and the cultural industry.

"Everyone understands cross-border arbitrage. Enterprise valuations in China are higher than overseas, especially for high-end tech companies. But a lot of people don't know technology arbitrage. You really need to understand technology in order to source the best deals," Wu says. "I have been investing in technology and operating tech firms for over 22 years. We're the most tech-focused investor in China."

The GP, GSR Go Scale Capital, will work closely with Hong Kong-listed investment company Good Resources on management of all M&A deals from the fund. The two parties will co-invest in certain transactions. Good Fellow is controlled by Cheng, while Wu owns more than 15%.

Prior to the launch of the new fund, GSR Go Scale acquired an 80.1% interest in Lumileds, the LED components and automotive lighting unit of Dutch electronics giant Philips, in a deal worth $3.3 billion.

In May, the GP led a transaction whereby a majority stake in its Chinese portfolio company, Lattice Power, was sold to Hong Kong-listed Shunfeng International Clean Energy (SFCE). Go Scale and its fellow investors in Lattice, which include GSR, Asia Pacific Resources Development (APRD), Crescent Point, Temasek Holdings and Mayfield, received HK$2.04 billion ($263 million) worth of shares in SFCE. Cheng is a shareholder in both APRD and SFCE.

Wu says those two transactions were made on deal-by-deal basis and they shouldn't be seen as emblematic of the coming buyout deals. "New investments will be in different sectors. We are not only looking in the US, but also Israel, Germany and Sweden. I can bring a new market to the portfolio companies. That's our value creation angle," he says.

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• Topics
• Fundraising
• Technology
• Greater China
• Buyout
• Fundraising
• China
• Technology
• GSR Ventures
• buyout