GGV Asia Mulls Expansion Into Private Credit After Split with US


GGV Capital, a global tech-investing powerhouse, has completed the separation of its US and Asia operations to form two standalone and independent partnerships, GGV said in a statement published Saturday on X, the social media site formerly known as Twitter. The firm had announced plans to break apart in September, months after a similar move by its larger peer Sequoia Capital during heightened geopolitical tensions between the world’s two superpowers. 

GGV, which had $9.2 billion in assets when it unveiled the split last year, is known for being an early investor in Chinese technology giants including Alibaba Group Holding Ltd., ByteDance Ltd. and Xiaomi Corp. GGV, whose US headquarters are in Menlo Park, Calif., also invested in Airbnb Inc. and Slack before the latter was acquired by Salesforce Inc. 

The Asia partnership, which is led by Jenny Lee and Jixun Foo in Singapore, has been rebranded as Granite Asia. It’s combined portfolio has $5 billion in investments, and will focus on markets including China, Japan, South Asia, Australia and Southeast Asia. 

The firm is planning to assemble a private-credit investing team as early as the second half of this year, the people said, asking to not be identified discussing private information.

Private credit, which includes direct lending to companies, is a fast-growing asset class that is becoming a bigger source of funding for businesses from tech startups to real estate companies. Institutional investors and wealthy individuals have been putting more money in private-credit funds, which can make secured or unsecured loans, invest in distressed debt, or structure customized debt solutions for individual corporate borrowers that don’t qualify for traditional bank loans.  

Read more: China’s Property Crisis Pushes Private Credit to Tech Sectors

In its statement Saturday, Granite Asia said it intends to expand into other asset classes and markets in the region, without giving details. It added that the plans reflect “the evolving needs of businesses and investors.” Its name comes from Granite Global Ventures, GGV’s original handle when the firm was founded in 2000. 

It said Thomas Ng, a GGV founding partner, Teh Kok Peng, former GIC president for Special Investments, and Teo Ming Kian, former chairman of Singapore’s National Science and Technology Board, will be on an advisory council to guide the Asian firm’s expansion.

The firm will continue to buy stakes in technology startups in the region. It is also exploring private hybrid funding, which would involve a mixture of equity and debt, the people familiar with the matter said. Granite Asia is also likely to wait for at least one to two years before it raises another venture-capital fund, one of the people added. GGV’s last major funding round was in 2021, when it raised $2.52 billion for four of its funds.

GGV’s US partnership will be known as Notable Capital, according to the statement on X. The US firm, led by managing partners including Glenn Solomon and Hans Tung, will invest primarily in the US and Europe.

GGV decided to split into two firms after a US congressional committee launched a probe into its investment in Chinese semiconductor firms and AI developers including Megvii Technology Ltd. Sequoia Capital broke up into three entities focusing on China, India and Southeast Asia, and the US and Europe, respectively. Sequoia’s US firm kept its name, while the China partnership is now called HongShan Capital and the third entity is called Peak XV Partners. 

The biggest global venture firms have long managed investments across the Pacific, deploying funds raised from US endowments, pensions, global sovereign wealth funds and other institutions into lucrative internet and technology companies in the world’s two largest economies. 

In the past year, politicians and regulators in Washington and Beijing have amped up scrutiny of cross-border tech investments, making it increasingly hard for venture firms to navigate a changing geopolitical landscape. In August, President Joe Biden signed an executive order limiting US investment in some Chinese firms, part of a push to restrict the country’s ability to develop next-generation military and surveillance technologies that might threaten US national security. The order regulates US investments in some Chinese semiconductor, quantum computing and AI firms. 

With governments increasingly scrutinizing how companies handle data and where they get funding from, investors in cutting-edge technology and biotech firms have had to set up firewalls between different regions. 

As part of GGV’s split, the US and Asia operations have localized and separated data storage for different geographies to ensure they comply with local government requirements, one of the people said. 

GGV’s legacy funds will remain in operation, and their undeployed capital will be invested in existing portfolio companies, the people said. In China, GGV’s yuan-denominated funds will continue to operate independently under the Jiyuan Capital brand led by Eric Xu, GGV said earlier. 

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Published: 30 Mar 2024, 03:54 AM IST

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