| Feroz Dewan, Tiger Global Management (Bloomberg) |
Charles (Chase) Coleman III’s Tiger Global Management confirmed it raised $700 million for its new Tiger Global Internet Opportunities fund when it launched January 1.
This is short of the $1 billion to $1.5 billion the New York hedge fund firm had targeted for the long-only Internet-only fund. (We reported in January that a regulatory filing indicated the firm had raised about $600 million for the fund.)
In addition, the hedge fund firm said Tiger Global Long Opportunities, its long-only fund, now manages $2.3 billion. At the end of September, the fund, including its offshore equivalent, had $1.5 billion.
This suggests that the fund has raised about $700 million since it was up 3 percent net in the fourth quarter. When the firm announced in its November 25 letter that it would reopen the long-only fund, it said it hoped to raise $500 million to $1 billion of new capital.
The new disclosures regarding the two funds were made in Tiger Global’s fourth-quarter letter, dated January 30 and obtained by Alpha. We earlier reported that Tiger Global, the hedge fund headed by Feroz Dewan, was up about 17 percent last year.
In any case, Tiger Global Management seemed to have a sense of urgency when it announced the new Internet fund to take advantage of perceived opportunities, given how late in the year the letter to clients announcing the launch was dated. The firm said at the time that its long investments in the Internet sector had compounded at 37 percent gross and 31 percent net since inception.
In the fourth-quarter letter, Tiger Global reminded clients that one of the most important themes in both the hedge fund and long-only fund is e-commerce and online classifieds. In fact, the firm pointed out that in the 13 years since it was founded, it has invested in more than 100 e-commerce and online classifieds companies in both its public and its private equity funds.
Most of Tiger Global’s exposure to consumer Internet companies is in China, it noted, “where limited offline infrastructure and the rapid proliferation of desktop and mobile Internet has enabled companies to achieve unprecedented growth and market share.”
Its largest position in this theme, Tiger Global noted, is Autohome, which it says is China’s No. 1 Internet auto portal. “The company has a mobile app and Website where consumers gather information about new and used cars, read and contribute to user generated content and scan vehicle listings,” it explained.
Autohome, which is profitable, generates revenue from a variety of sources, including ads placed by manufacturers and car dealers as well as software subscription fees from dealers. “We believe the company is well-positioned to benefit from the continued share shift from offline to online sourcing channels as well as from rising car penetration in China, which currently stands at roughly 10 percent,” Tiger Global added in its report.
The firm discussed another key theme in the long portfolio — high-speed broadband. It explained that these days, most consumers receive broadband Internet service from cable companies, which bundle it with television and landline telephone service. But in the future, as broadband is used for more bandwidth-intensive services like video streaming, high-speed Internet providers will have a cost advantage and spark further consolidation.
Who will be the winners?
Tiger Global singled out the two companies it says are “headed” by John Malone — he’s actually a director of Stamford, Connecticut–based Charter Communications and chairman of Liberty Global, based in London — and two companies headed by Patrick Drahi: Altice, based in Luxembourg, and Numericable in Paris. Tiger Global called these media moguls “two of the most aggressive consolidators as well as two of the best capital allocators in the industry.”
