Techpacific still looks for bargains
ERIC NG
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Internet start-up investment firm techpacific.com is stepping up the pace at which it acquires companies in need of new funding, according to chief financial officer Christopher Leahy.
Despite the gloom-and-doom environment that has pervaded the Internet economy for the past nine months with companies being forced to scale back operations and cut staff, Mr Leahy said the Internet sector still had long-term potential.
"The Internet is not going to go away . . . companies still need to put their business online," he said.
He said the company was acquiring more Internet companies in a bid to build a regional presence, adding "it is going to get tougher for companies which aren't adequately funded or profitable."
However, most venture capital fund managers have not gone on a buying spree, despite sharply cheaper valuations stemming from the burst of the dotcom stock market bubble.
"A lot of [venture capital firms] either have stopped investing or have concentrated on their existing portfolio and tried to sort out the good from the bad [investees], but we are still investing. No doubt people are getting more picky, but there are still some good deals out there," he said.
However, Mr Leahy said it was a long and arduous task to sort out start-ups in which it was worth investing.
The firm manages about US$100 million of clients' funds, although only about US$16 million has been invested. It also manages HK$250 million of the government's Applied Research Fund.
The company also has more than US$30 million of internal cash available for investment.
"We are concentrating on the good and larger deals. Sometimes we double up on the really good ones," Mr Leahy said.
Last week, techpacific.com agreed to acquire a 51 per cent stake in loss-making Australia-based regional Web-site designer Spike CyberWorks by issuing A$10.5 million (about HK$44.3 million) of techpacific shares and injecting A$10 million cash.
This compared with the A$23.3 million valuation for a 30 per cent stake in December 1999, when Pacific Century CyberWorks agreed to buy into Spike CyberWorks. Techpacific is merging its own local start-up Web design operation - tp factory - with the Spike CyberWorks' operation.
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