Vision Knight’s value-add proposition

It is what led him to set up his own private equity firm, Vision Knight Capital, and last week purchase a strategic stake in Allyes, an online media company that provides value-added services to advertisers.

"The real value of investing in China is not about capital and the access to IPO, it is more about good operational support through knowledge, network and resources," Wei explains. "To prove our ability, we even offer operational and strategic consulting before we invest, as a kind of free service."

Allyes is a good example because it wasn't desperate for financial support. Founded in 1998, the company claims to be the largest Chinese online advertisement platform offering interactive marketing solutions. In 2007, Focus Media acquired the company in a cash and stock deal reportedly worth up to $300 million, conditional on performance. Three years later, Silver Lake bought a 62% stake for $124 million.

"Different parties have expressed an interest in working with Allyes, but we are basically self-sufficient, with no debt, and we don't need to raise funds," Eric Chen, CEO of Allyes tells AVCJ. "It is the value-added approach on top of the capital that attracts us to get Vision Knight's funding."

This approach is not only manifested in Wei, who spent five years at Alibaba, but also in two colleagues who joined him at the fund: Elliott Huang, who was a vice president at Alibaba before that worked for Walmart China; and Blue Wu, who was a senior marketing director at the tech firm.

Vision Knight's capital and expertise will be used to identify opportunities for market consolidation as well as boosting R&D expenditure. Wei actually joined the Allyes board last December and Vision Knight is already involved in the firm's strategic planning and business activities, and in the recruitment of senior management professionals.

The private equity firm has also completed a second close on its $300 million maiden fund, which targets companies in the retail, internet and e-commerce industries. The LPs are all family offices of entrepreneurs in China, Hong Kong, Singapore, Taiwan and Europe - including Jack Ma, founder of Alibaba Group and Wei's former boss. These entrepreneur backers are expected to contribute their own expertise to Vision Knight's operations.

In addition to Allyes, the private equity firm's portfolio features an e-commerce business that was spun out from a wholesale company listed in Shenzhen. Two more consumer deals are scheduled for announcement in the next two months, taking the fund's full commitment to $100 million across six transactions.

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• Topics
• Expansion
• Media
• Greater China
• Venture
• China
• TMT
• Growth capital
• Vision Knight Capital
• Silver Lake
• Venture