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Sequoia Capital’s China unit is drawing up plans to expand into Singapore, putting it in competition with another arm of the venture capital group as the firm divides into three amid rising geopolitical tensions.
HongShan, the Chinese arm of the Silicon Valley group, has set up an office in the city-state and is working on plans to use it as a base for investing in south-east Asia, multiple people with knowledge of the situation said.
That would pit the Chinese investment juggernaut, which manages $56bn in assets, against Peak XV Partners, Sequoia’s India and south-east Asia business, which already has an office in Singapore.
Both units, along with Sequoia’s US-based business, will split into separate companies by 2024, the group said last month.
HongShan is “meeting lots of private capital investors and talking about doing deals and other opportunities here”, said a director at a rival venture capital fund in Singapore. “[They] have asked to keep [it] quiet for now . . . There are sensitivities involved with Peak XV.”
Sequoia denied last month that concerns about the rising tensions between the US and China were behind the firm’s uncoupling. It said its shared brand was creating “growing market confusion” and “portfolio conflicts”. The split means the US, China and India units will no longer use joint branding and back-office services and will stop sharing profits.
While they are not barred from competing after the break-up, HongShan’s under-the-radar expansion in Singapore is an early sign of how the former colleagues are now entering each other’s turf as rivals. Peak XV is also planning to open a US office, the company said.
A number of executives from HongShan have travelled to Singapore in the past six months, the rival fund director added. The new office will accommodate at least two members of its investment team.
The China unit, which is managed by renowned investor Neil Shen, who led early investments in Alibaba and TikTok owner ByteDance, has told people in Singapore meetings that it would initially look to support its existing Chinese founders who had international businesses in the city-state. However, it also expressed interest in investing in start-ups.
One person who had spoken to HongShan executives in Singapore said it could tap into growing demand from Chinese founders to set up operations there and rebrand themselves as Singapore-based, a move that has been dubbed “Singapore-washing”. The city-state’s neutrality is appealing as the US steps up its scrutiny of outbound capital to China.
HongShan’s interest in south-east Asia comes at a time when some of Peak XV’s portfolio companies are facing difficulties.
The ecommerce group Zilingo went into liquidation in January after complaints of financial irregularities and the high-profile firing of its co-founder and chief executive.
Educational technology provider Byju’s, once India’s most valuable start-up, lost that position after investors wrote down the value of their stakes. Last month, its auditor resigned over a lack of information provided for its accounts, and the company suffered a series of high-profile board departures, including Peak XV’s representative.
HongShan told the Financial Times it had a “strong foundation of trust” with PeakXV and there would be opportunities for both teams to collaborate. “HongShan’s focus continues to be partnering with Chinese founders and supporting them on their globalisation journeys,” it said.
Peak XV said: “The opportunities for collaboration [with HongShan] are far greater than the scope for competition.”
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