Three media investment groups said on Wednesday they had formed a $1.5 billion fund to back international Internet ventures, as the hot money chasing the Web`s explosive growth looks beyond the increasingly saturated US technology financing market.
CMGI of Andover, Mass., Hicks, Muse, Tate & Furst of Dallas and Hong Kong`s Pacific Century CyberWorks said they would jointly invest up to $1.5 billion in emerging Internet firms worldwide.
On Tuesday, Pacific Century won a bidding war for Hong Kong telecommunications company Cable & Wireless, offering $35.9 billion in cash and shares in Asia`s largest merger.
The three announced the formation of a new venture capital partnership, with each of the three companies committing to invest up to $500 million to support development of Internet firms based in Asia, Europe and Latin America.
"Internationally, you have got the hyper-growth and all these new business ideas that you used to have here," Michael Wallace, a New York-based analyst with international investment bank Warburg Dillon Read said, referring to trends concentrated within the United States for much of the past five years.
"In the US, if you look at the consumer segment, you already have the haves and have-nots emerging as the Internet matures and growth rates slow," said Wallace, who tracks top US companies like America Online, Yahoo! and Lycos.
The partnership brings together Andover, Mass.-based CMGI, often seen as an Internet version of famous stock picker Warren Buffet`s Berkshire Hathaway group, with buyout firm Hick, Muse, a major old and new media investor based in Dallas. They were joined by Pacific CyberWorks, which has plans to make Hong Kong the centre of an Asian Internet renaissance.
The joint venture, AtVentures Global Partners, will make investments in Web businesses spanning the four core disciplines of the Internet economy: programming content, community, commerce, and the software and services necessary to link Web businesses to their users and customers, they said.
Financial terms remain to be worked out as well the partnership structure and members of the fund`s board, officials said. AtVentures Global will have offices located in centres such as London and Hong Kong and appoint active managing partners in each region.
"I think it is very complementary if you look at where our respective strengths and where our goals are," Dave Andonian, CMGI`s president of corporate development, said in a phone interview of the planned fund.
Hicks is best known for forging what is now the largest US radio station network, turning two original stations into the string of 850 outlets formed by the merger of Clear Channel Communications into Hicks` AMFM.
In Latin America, Hicks Muse has invested in Argentina-based Web media network El Sitio, a soccer broadcasting network, and a minority stake in MVS, Mexico`s largest cable television operator.
"As old media start to converge with new media we have a lot of expertise," Tom Hicks, chairman and chief executive of Hicks Muse said of his company`s role, adding that: "Our new partners have the Internet expertise and vision. So there`s a lot of opportunities for all of us."
However, Warburg`s Wallace cautioned that, in some cases, Internet valuations in Europe, and more recently Asia and Latin America, have begun to exceed those in the US market.
"You see some of the same silly valuation trends," he said, referring to how some European Internet Service Providers now seeing market capitalisations relative to revenues that are two times greater than values put on US Internet access stocks.
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