By Hedge Fund Insight staff
Coatue Management, L.L.C. has joined China’s leading search engine, Baidu, and global investment firm KKR in investing $170m in Uxin Used Car, China’s largest online used car auction company. Philippe Laffont’s Coatue is a privately-owned hedge fund firm that invests in public and private equity markets focusing on the technology, media and telecommunications industries. In a regulatory filing nearly 60% of the publicly-visible portfolio was in the technology sector. In recent years the firm has made increasing commitments to investments in China.
On the public equity side Coatue has invested in US-quoted Chinese companies like SINA Corporation, the internet media company operating Chinese-language destination sites, Chinese search engine Baidu, and portal Sohu.com. Daniel Senft is the partner at Coatue responsible for the firm’s internet and media investments.
For its private equity investments, the firm invests in high-growth, pre-IPO technology under Thomas Laffont, a Senior Managing Director. Coatue West is based in Menlo Park in California, and can invest as early in a company’s life as later stage venture capital. This year Coatue has invested in social mapping platform Citymaps and Jet, Marc Lore’s online shopping/e-commerce venture, as well as Uxin Used Car.
Coatue first built up a dedicated analytical resource on China back in 2009. Six years ago it recruited a country specialist dedicated to tracking investment opportunities in China. According to VisaDoor Coatue has more Chinese (and Indian) nationals working at the firm than any other non-American nationalities. More recently Coatue Management has made efforts to reinforce its knowledgebase and network of Chinese internet companies at a higher level of corporate engagement. Last November Coatue recruited* Anthony Noto (see right) from Goldman Sachs, who had worked on the Weibo and Alibaba flotations.
Coatue Management participated in a $45m financing of HotelTonight in September of 2013. This deal showed a couple of aspects of the $10bn firm’s approach. First it prepared competitor data to demonstrate to its own satisfaction that HotelTonight was the leader in its sector. Second, to return to the China theme, a motivation for investment was that the pioneer of last-minute mobile hotel booking was about to expand into China.
The relationship with China’s internet giants is multi-dimensional. On the one hand Coatue has invested in the shares of Jack Ma’s Alibaba, on the other Coatue has participated in company financings (in the U.S.) with Alibaba. For example nearly a year ago both companies backed Lyft, the on-demand ride-sharing service, in its series D financing round. When Coatue completed a financing round for Snapchat on its own, it was investing in a company that Chinese internet giant Tencent already had a stake in. Today’s announcement of an investment in Uxin Used Car is one shared with fellow backer, the Chinese search engine, Baidu.
Finally, beyond the hedge fund management firm, the Coatue Foundation has had a Chinese flavour in a least one of its donations. Schwarzman Scholars, an elite international scholarship program at Tsinghua University in Beijing is designed to educate future world leaders about China. The initiative was started in April 2013 by Blackstone Chairman and CEO Stephen A. Schwarzman with a personal gift of $100m. The Coatue Foundation was one of a number of entities that took the Schwarzman Scholar scheme coffers to $350m with a sizeable donation.
*Noto accepted the offer then pulled out. He is the CFO of Twitter now. The intention behind the putative hire stands.