Taiwan’s CDIB Capital launches cross-strait VC fund
CDIB Capital, the PE arm of Taiwan’s China Development Financial (CDF), is raising a later-stage venture fund to focus on cross-strait expansion.
The fund, CDIB Capital Taiwan Partners, comes three months after the GP closed its debut Asia fund - CDIB Capital Asia Partners - at $405 million. It was the first time that CDIB Capital raised third-party capital since its inception in 2006. Previously the firm made investments from CDF's balance sheet.
The Taiwan Partners vehicle will be smaller than Asia Partners, targeting about $170 million, according to Paul Yang, chairman of CDIB Capital and president and CEO of CDF.
The fund was almost fully subscribed when it was launched due to enormous interest from Taiwanese investors. However, CDIB Capital wants 20-30% of the corpus to come from foreign investors, in line with its desire to become more institutionalized. CDF is putting in about $60 million as an anchor investor.
While Asia Partners is a middle-market growth fund that typically deploys $25-50 million in per deal, Taiwan Partners is going to commit $5-10 million for each investment. The cross-strait fund is targeting the so-called "hidden champions" in Taiwan, meaning little known but highly successful mid-size companies. It will be active across a number of industries, although there is a particular interest in precision manufacturing.
"Areas such as auto cooling systems - they are so niche you would only have heard of them if you come from the industry," said Yang. "There are many Taiwanese enterprises in these kinds of upscale verticals that are global leaders. However, many are family-run businesses and they need a professional investors to help them become more institutionalized."
Portfolio companies should also be smart and green; anything concerning robotics, cloud computing and recycling will meet Taiwan Partners' investment criteria.
CDIB Capital currently manages three venture capital funds in Taiwan, covering technology, media and telecom, healthcare, and culture. The GP also has three renminbi-denominated funds in China launched with local GPs. The most recent one was a RMB2 billion ($320 million) fund formed last year through a partnership with China's state-owned Govtor Capital.
The firm has built a 27-strong team and operates in Hong Kong, Shanghai, Taipei, Seoul and San Francisco.
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