Cross-currency restructuring underpins Ameba's VC fund

NewQuest Capital partners led the secondary portion, essentially financing the acquisition of several software-as-a-service (SaaS) companies from an older local currency vehicle so they could be used to seed the new fund. Other LPs include sovereign wealth funds, fund-of-funds, technology sector corporates, and family offices from Europe, North America, the Middle East, and Asia.

Ameba claims the new fund is the first in China dedicated to SaaS investments. The space has become increasingly popular with generalist VC players in recent years. Some specialists have also emerged, such as Yunqi Partners, which concentrates on enterprise software and services. The firm closed its third US dollar fund last month with $300 million in commitments.

Ameba’s portfolio features the likes of Jushuitan, Yao Inno, Leyan Technology, Xiaoyang Education and BY AI, said to be the leading domestic SaaS players in e-commerce, healthcare, and education, respectively. The venture capital firm believes SaaS in China will continue to grow at a rapid pace over the next two decades, according to a statement.

Local research firm Hap Academy estimates there are more than 4,500 SaaS companies in China, while the country’s SaaS enterprise user base swelled by 82% last year, reaching 9.15 million. The industry is expected to be worth RMB66.6 billion ($10.3 billion) by the end of the year. PE and VC investment hit RMB30.7 billion in 2020, with nearly 200 companies receiving funding.

Ameba was founded in 2011 by Andrew Teoh, who previously led corporate finance and corporate development in Alibaba Group, and Kevin Wang, formerly CFO of Kingsoft Corporation. Teoh departed in 2018 and has since established Ikaria Group, which makes public and private technology investments and alternative credit investments. Wang remains a managing partner of Ameba.

The firm raised $25 million for its debut renminbi-denominated fund in 2011, primarily sourcing capital from Chinese technology sector entrepreneurs. A second fund of RMB1 billion ($157 million) closed in 2015. Existing LPs re-upped and Ameba brought in two institutional names: a traditional renminbi fund-of-funds and a Greater China-focused family office.

SaaS was part of a broader remit that included e-commerce, healthcare, financial technology, artificial intelligence, big data, social networking, marketing technology, smart hardware, and renewable energy. Non-SaaS investments included ride-hailing platform Didi, online fashion platform Mogujie, and online education business Chuanke, and electric vehicle manufacturer WM Motor.

This is not the first time NewQuest has facilitated a China-based manager’s expansion from the renminbi space into the US dollar space. It did much the same for Loyal Valley Capital in 2018, leading a $390 million restructuring and becoming an anchor LP in the new US dollar vehicle.

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• Topics
• Greater China
• GPs
• Fundraising
• Technology
• Venture
• Renminbi fund
• Secondaries
• China
• Ameba Capital
• NewQuest Capital Partners
• TMT
• Secondaries