That’s less than the $8 billion some customers were initially told the company was likely to target, as markets shift and Tiger Global focuses more on early-stage project bets, according to people familiar with the matter, who asked not to be identified. private communications. The figure is also less than half the size of the previous vintage.
The new instrument, Private Investment Partners Fund 16, will invest in start-ups, “largely on institutional topics and in India” and “in a low-value environment,” New York-based Tiger Global said in a letter to investors Thursday.
PIP 16 will focus on enterprise programs that support the internet, fintech, and consumer businesses because they are “non-penetrating classes” with rapid and long-term growth potential, according to the letter. The fund will also make “opportunistic follow-up investments” in Tiger Global’s existing list of global portfolio companies, including through secondary stock purchases.
Some people have said the employees will get at least $500 million, most of which will come from founder Chase Coleman and his strong partner Scott Schleifer.
A representative of Tiger Global declined to comment.
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The company told investors earlier this week that partner John Curtius, who has focused on software and intercompany investments, is leaving. He was responsible for more than 100 of the company’s private bets. People said she notified clients of his departure before starting to raise funds for PIP 16 to avoid surprises after they committed capital.
This year has been the most turbulent since Tiger Global was founded in 2001, as the company’s total assets fell to about $63 billion from $100 billion. Its hedge fund lost nearly half its value during August as stocks tumbled and valuations of startups plummeted, while its long-term fund only fell about 62% during July.
Tiger Global’s private portfolio slid in the third quarter and has lowered valuations every month this year. One person said seven investments each lost at least $100 million.
According to the letter, “Public market valuations declined rapidly and purposefully in our focus areas, which subsequently led to lower valuations and deal activity in private markets while increasing the cost of capital.”
Fundraising has become more difficult for companies this year, as institutional investors, including pensions, endowments and family offices, have become more exposed to private equity.
PIP 16 will be Tiger Global’s 15th fund (skipped number 13). The company said in the letter that its first closing will be on January 18, and participating investors will receive a reduced management fee of 1.75%.
The fund will make investments over a period of at least two years. At $6 billion, it will be Tiger’s third largest private vehicle. PIP 15 closed earlier in 2022 with a record $12.7 billion.
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Over the course of nearly two decades, PIP funds have generated a net internal rate of return of 24%, according to the letter. 12 investments generated more than $1 billion in gains each.
In the letter, she said, however, the company should have cut back on the poor performance. Most of the fund’s bets have been in early stage companies, with an average investment size of $30 million – less than a typical $50 million.
Tiger Global has closed 275 deals so far this year, compared to 383 for all of 2021, according to PitchBook data. The company’s current active investment portfolio is worth about $45 billion.
“Fundamentals remain strong across the portfolio” and some larger companies are “preparing for an IPO when markets are supportive,” the company said in the letter.