| O. Andreas Halvorsen, Viking Global Investors (Bloomberg) |
O. Andreas Halvorsen’s Viking Global Investors is looking to raise additional capital for its new hybrid fund launched at the beginning of this year. In its second-quarter letter, obtained by Alpha, the Greenwich, Connecticut firm says that on October 1 it will open the fund, Viking Global Opportunities. It will be available to current Viking investors or outsiders.
The letter does not specify a cap on how much the firm plans to raise, but it stresses it is seeking additional capital “to scale” the fund “to the size we deem appropriate for the opportunity set.”
VGO, a liquid-illiquid — or so-called hybrid — fund was launched at the beginning of the year, designed to accommodate illiquid securities. At the time, Viking said the portfolio held seven unlisted companies.
“Changes in the marketplace, such as the delay in companies going public, demand that we remain active in the private space to enhance our public activities,” Viking said in its 2014 second-quarter letter when it announced the new fund. “We believe that we make better investment decisions across the board by studying new entrants and periodically investing in them although they may not be listed. We often find that private companies develop disruptive business models and new technologies that directly impact our public positions.”
In the first half of 2015, the new fund rose 6.2 percent after gaining 0.9 percent in the second quarter. Viking’s long-short fund, Viking Global Equities, returned 0.8 percent for the quarter and 5.6 percent for the first half of the year, while the Viking Long Fund rose 0.8 percent in the second quarter and 7.3 percent in the first half.
As of June 30, Viking Global Opportunities held $1.6 billion. Of that amount, $111 million was invested in three private companies, while $1.5 billion was invested in the liquid portfolio.
Obviously, Viking wasn’t exactly going to deploy most of the new capital immediately to private investments, and it wasn’t going to simply throw it into the bank and get near-zero returns.
At least one of the three private companies it invested in during the first half was Credit Karma, the online company that provides free credit scores. Lenders pay Credit Karma in order to reach prospective customers. Other investors in the deal included two other descendants of Tiger Management — New York-based Tiger Global Management and New York–based Valinor Management.
The firm seems especially interested in investing in health care companies. This is not surprising, given that this sector counts for the biggest exposure in Viking’s long-short and long-only funds.
For example, at the end of the second quarter, various health care companies accounted for 43.5 percent of Viking’s 147.4 gross exposure in Viking Global Equities and 19.6 percent of its 51.7 percent net exposure.
In fact, at the end of the second quarter, drugstore giant Walgreens Boots Alliance was the largest long position in both the long-short and long-only funds, while drug giant Allergan was the third-largest position.
What’s more, Illumina, a provider of genetic sequencing instruments and its sixth largest current holding, was the top performer in the second quarter, kicking in 0.8 percent to both funds.
Viking’s emphasis on the sector is also apparent in the firm’s private holdings. For example, in the past year it has made investments in at least four biotechnology companies.
Late last year, for example, it participated in a $450 million private equity investment in Moderna Therapeutics, a biotechnology company that develops protein therapies based on messenger RNA technology.
In April 2014 it also invested $105 million in Adaptive Biotechnologies, which describes itself as a pioneer in immunosequencing diagnostics. Viking was the sole investor in the Series D financing and, as part of the deal, received an observer seat on Adaptive’s Board.
More recently, in July Viking led a $45 million, oversubscribed Series B round of financing for Ginkgo Bioworks, an organism design company.
And on August 10, Viking participated in the $120 million, Series B private financing of Editas Medicine, a genome editing company.
