The Business Times, Friday, March 9, 2001; From Quak Hiang Whai in Hong Kong

TAN Lip-bu’s Walden International Investment Group raked in US$1.5 billion (S$2.6 billion) from potential investors in its latest round of fund raising but the venture capitalist has capped the proceeds at US$900 million.

Marketed worldwide with its closing date on March 31, the latest fund, PacVen Five, was raised in a record time of two months. The funds aim at focusing on mainland China, Hongkong, Singapore and Japan for its Asian portfolio.

Walden typically invests one-third of its money in Asia, one-third in the US and the rest in hybrid companies with cross-border operations. The previous fund, PacVen IV, raised US$328 million.

Tan, who is chairman and founder of Walden, said the track record of Walden – which he described as a contrarian investor – allowed the group to raise the overwhelming amount of money despite the poor current fund raising conditions for venture capitalists.

For instance, the conscious decision to avoid over-investing in the dotcoms particularly the business-to-consumer sector had served the group well and most of its portfolios are above investment values despite the sharp downturn in the US markets, Mr. Tan said.

Reviewing the US economy and its high-tech sector, he said he expects the consolidation in the Internet and telecom sectors to continue for at least another two years.

On the macro-economic front, Mr Tan said he is less optimistic than a lot of others and he is convinced the US economy is going to slow sharply this year.

He reckoned there are now some 10,000 Internet companies funded by venture capitalists and only about 150 of them would eventually survive – the rest would either going bankrupt or be absorbed by others. Companies which use Internet as a new medium to enhance sales capabilities and reduce operating expenses are the ones that would do well, he said.

More B2C companies are expected to go bust, affecting the overall market sentiment even in the B2B sector.

About 25 to 30 per cent of venture capitalists would also be wiped out, said Mr. Tan. He added that the latest crisis was the most challenging in his 20 years’ experience in the venture capital industry.

Still, Walden sees enormous opportunities ahead even with the shakeout in the high-tech and telecom sector.

The fund manager plans to focus its attention on biotechnology, semiconductors, B2B Internet infrastructure, software outsourcing and telecoms components. It is likely to invest in fewer companies but with larger amounts.