Genesis nets $850m for second China tech growth fund
Genesis Capital, a Chinese GP established by Richard Peng, who previously led investments for Tencent Holdings, has closed its second US dollar-denominated fund at the hard cap of $850 million.
Peng founded the business in 2015 with Kurt Xu, who held senior positions at Tencent across operations, strategy, and investment. The GP raised approximately $450 million for its debut vehicle in 2016 and it also manages two renminbi funds.
A filing from August 2018 indicated the new fund had raised $566 million against a target of $750 million. Genesis said in a statement that commitments came from pension funds, sovereign funds, insurance companies, and foundations. It added that the international LP base has broadened from Fund I, with participation from new investors based in North America, Europe, and Australia.
The Fund I portfolio includes 13 companies, of which seven have achieved unicorn status. Genesis claims to have helped orchestrate NASDAQ-listed mobile dating app operator Momo's acquisition of industry peer Tantan last year. Investors in the latter, including Genesis, received $600 million in cash plus Momo stock. The firm also helped bring about the merger of Huochebang and Yunmanman to form Full Truck Alliance Group.
Genesis makes growth-stage investments in internet-related consumer, B2B services and enterprise services companies. It believes in concentrated portfolios, backing only 10-15 businesses per fund. The firm looks to leverage information technology to drive productivity and efficiency improvements.
"As the massive digitalization process continues in China from consumer services to enterprise services, from tier one and two cities to tier three and four cities, information technology will become increasingly intertwined with traditional industries, to reshape, upgrade, and even disrupt traditional industries. The continued penetration of information technology, combined with the multi-tiered market in China, will create diverse innovation opportunities for entrepreneurs," it said in a statement.
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