Morningside closes fourth China TMT fund at $660m

The firm completed the fundraising in September. All existing LPs from Fund III re-upped in the new vehicle, with commitments from endowments, pension funds, sovereign wealth funds, family offices in Europe and the US, according to a statement posted on Morningside's official WeChat account. Asia Alternatives Management, an investor in Morningside since Fund I, is among the LPs.

Ken Shi, a managing director at Morningside, said in the statement that LPs have shown confidence to the firm although "everyone is talking about VC market is starting to cool down."

The new fund comprises three vehicles: a $400 million core fund, Morningside China TMT Fund IV, and two vehicles for growth and later stage investments. These are Morningside China TMT Special Opportunity Fund II, and Morningside China TMT Fund IV Co-investment Fund, with $200 million and $60 million, respectively.

Morningside spun out from its family office parent in 2007-2008 and launched independent funds, although the Chan family remains an anchor LP. The first fund raised $150 million in 2008 and the second closed at $225 million three years later. Morningside's third fund of $412 million was raised in early 2014, split between a core fund, a special opportunity fund and a co-investment vehicle.

The investment strategy for Fund IV is largely consistent with that of its predecessor. The GP focuses on investing in technology, media and telecom (TMT) industries in China, including financial services, healthcare, e-commerce, enterprise software, social networking and education sectors.

The firm manages over $1.5 billion in assets and has offices in Shanghai, Beijing and Hong Kong. There are three managing directors, Richard Liu, Gerald Chan and Shi. 

Morningside's approach to structuring its fund reflects the increased focus among China VC firm on growth and even late-stage technology deals. Sino-US VC firm GGV Capital is planning to raise up to $1.1 billion across three vehicles - a core venture fund, a top-up vehicle and an early-stage fund - that will target start-up and growth-stage technology deals in China and the US.

Earlier this year, DCM, Qiming Venture Partners and Banyan Capital reached final closes on a top-up fund, an annex vehicle, and a co-investment fund, respectively. These came several months after core funds were raised.

An annex fund is specifically for follow-on investments in existing portfolio companies. An opportunity fund may have the same purpose, but in certain cases these vehicles have been used to pursue separate later-stage deals as well.

In July, Shunwei Capital Partners hit the $1 billion mark, with the capital split equally between a core fund and an opportunity fund. The GP said that it not only wanted to make follow-on investments in existing portfolio companies but also invest in new companies seeking expansion rounds.

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• Topics
• Fundraising
• Venture
• Greater China
• Technology
• China
• TMT
• Morningside Technologies
• Venture
• Fundraising
• Asia Alternatives Management