Naver to participate as LP in VC funds of Sequoia, SoftBank-TPG

  • 2018-06-21

South Korea’s biggest internet portal Naver Corp. will commit undisclosed amounts of capital to two new start-up funds of Sequoia Capital, a US venture capital firm and Japan’s SoftBank Group in pursuit of new technology and global expansion.

With about $2 billion in cashable assets, Naver decided in a recent board meeting to participate as a limited partner in Global Growth Fund III of Sequoia Capital and in a China fund co-managed by SoftBank and the US private equity firm TPG, according to sources with knowledge of the matter on June 19.

The capital commitments were part of investment diversification effort to improve cash management, a Naver source told the Korean Investors.

Although Naver did not disclose the amounts of committed capital to the two start-up funds, it is believed to pour between tens of millions of dollars and hundreds of millions of dollars into each of them.

Sequoia Capital set a $250 million minimum check size required for limited partners to participate in the fund, according to a CNBC report in March.

The US venture capital firm was reportedly on track to raise $6 billion to $8 billion for the new mega fund. The new venture fund is tipped to be the largest start-up fund since SoftBank’s $100 billion Vision Fund.

The capital commitments come after both SoftBank and Sequoia China invested $50 million in the Chinese operation of Naver’s video messaging app Snow for a 20% stake in January.

For its part, Naver had committed 86.5 billion won ($78 million) to SoftBank Ventures, part of the Japanese internet and telecom conglomerate, in two tranches between 2014 and 2016, according to its regulatory filing last month.

The South Korean online search engine has been seeking to invest in venture firms through start-up funds and acquired technology companies to boost its businesses including mobile messenger Line and community app Band.

Last year, it bought Xerox Research Centre Europe in France for an undisclosed sum. The research center focuses on artificial intelligence, machine learning, computer vision and natural language processing.

Naver held $1.8 billion in cashable assets on a consolidated balance sheet as at end-March, according to the company.

In February, it decided to commit 18.4 billion won to a 280-billion-won private equity fund raised by Mirae Asset Financial Group to buy around a 0.5% stake in Didi Chuxing, China’s biggest ride-sharing company.

Recently, Naver invested 3 billion won in Balance Hero, a mobile wallet app, for a 2.54% stake. SoftBank Ventures has also invested in the India-based Korean start-up.

Separately, it poured 2 billion won into 72Seconds, a Korean video contents creator, to secure a 9.09% stake.

By Ikhwan Kim

lovepen@hankyung.com

<Edited by Yeonhee Kim>

Photo: Getty Images Bank