It’s no secret Tiger Global Management is one of the most aggressive investors in small, private fledgling Internet companies — especially in India and China. We have been chronicling the New York firm’s new investments seemingly every few days.
Now a rare glimpse into this operation reveals that the firm has posted gargantuan gains in its nine funds, known as Private Investment Partners (PIP).
According to its recent semiannual letter, dated July 31 and obtained by Alpha, since 2003 the PIP funds have invested some $9.2 billion in 201 companies in 30 countries.
The firm has entirely exited 72 investments and returned $9.9 billion in cash and stock net of fees to investors. This works out to a 43 percent internal rate of return (IRR) on the “realized investments,” according to the letter.
Tiger Global currently has seven active funds that hold 128 investments valued at $12.9 billion.
According to Tiger Global, the blended net IRR across all of its funds, including realized and unrealized investments, was 31 percent as of March 31.
Altogether, the firm founded by Charles (Chase) Coleman III has more than $10 billion in its private funds, according to a source. The private funds are separate from what Tiger Global calls its public funds — its long-short hedge fund and long-only fund.
Scott Shleifer, who has been with the firm since 2002, became the head of Tiger Global’s public equity business on July 1, after the departure of Feroz Dewan. Lee Fixel took over as sole head of Tiger Global’s private equity business, a position he had shared with Shleifer since 2011.
In the first half of this year, the PIP funds invested a total of $1.2 billion, including $430 million in 26 new companies and the rest in companies already in the portfolio.
The firm’s newest fund — PIP IX — has already invested $1.4 billion of the $2.5 billion committed to the fund in 44 companies, according to the letter, faster than the firm concedes it had anticipated. Nearly half was invested in India, one quarter in the U.S., 21 percent in China and 7 percent in Brazil.
Tiger Global told investors it is highly selective, seeking businesses “with sustainable barriers to entry that can be purchased at attractive multiples of expected future cash flow.”
This process included a large number of Internet companies, as Tiger Global noted growth in usage “from cheaper, faster, and more powerful mobile devices continues to be the most powerful secular theme” it sees, asserting “we are still in the relatively early stages of this trend.”
Altogether since 2003, Tiger Global has invested 90 percent of the capital raised in its private nine funds in Internet, software and financial technology companies.
The firm stressed that the cost of launching a new business continues to decline, leading to an expansion of new potential investment opportunities, especially in India and China, which are “bypassing traditional ways of communicating and transacting.”
In the past four years alone, Tiger Global has invested a total of $3 billion in those two countries.
“India continues to be one of the most attractive geographies for additional investments given its large population, robust GDP growth, positive demographic trends and low smartphone penetration,” the investment firm’s report stated.
In the first half of this year, Tiger Global’s private funds distributed $5.4 billion in cash and stock net of fees to investors, fully exiting six positions.
Even so, two companies that have gone public remain major positions in the firm. They are JD.com, which is one of the largest holdings of the public funds, and Etsy, whose stock has been plummeting of late. Etsy is still heavily held by the private funds, which did not sell shares in the initial public offering, and the public funds.
The two largest holdings among the private funds are Flipkart — an Indian e-commerce giant owned by five of the nine funds — and Ola, known as the Uber of India and owned by three of the nine funds. The firm explained that Flipkart is a top e-commerce company and third-party marketplace.
Tiger Global has invested more than $1 billion in Flipkart, or about 30 percent. The firm has invested $83 million in Ola and owns 19 percent of the company, which operates in 87 Indian cities.
In fact, Tiger Global has chosen to invest in four competitors of Uber in nations where the company is not dominant: Ola in India, DiDi Kuaidi in China, GrabTaxi in Southeast Asia and 99Taxis in Brazil. “The industry is evolving rapidly and these are still early-stage businesses that must execute,” Tiger Global conceded.
But given its track record, chances are Tiger Global is betting on at least a few of the right horses in this race.
