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New York-based $50 billion Tiger Global is raising its latest private equity fund.
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A person close to the company said the manager plans to raise nearly $2 billion.
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Tiger Global told potential investors it was committed to reducing its bets on companies it has deep faith in.
Tiger Global’s latest private investment fund will raise significantly less money than its predecessor from 2021 to 2022, but the $50 billion asset manager isn’t worried.
The company expects to raise nearly $2 billion for PIP 17, a person familiar with the manager told Business Insider.
That’s a fraction of the money raised in PIP 14 and PIP 15, and much closer to PIP 16, which ends in early 2024 with $2.2 billion in assets and an initial target of $6 billion.
While smaller rounds are typically accompanied by a decline in investor interest, Tiger Global believes the size of the new fund will be a boon for those who decide to invest.
“Throughout our history, we have also found that smaller, more concentrated funds are associated with our strongest returns,” the firm wrote in a letter to potential investors seen by Business Insider.
Tiger Global declined to comment.
The letter noted that each of the top 10 private equity funds raised less than $3 billion, made fewer than 50 investments on average, “generated a gross IRR of 34% and a net IRR of 23%, and made distributions in excess of investor commitments.”
“We believe that a fund of this size can bring us significant benefits, particularly in terms of the impact that mid-cap investments can have,” the letter reads.
In other words, from 2020 to 2022, Tiger Global’s aggressive venture capital style, when the company seemed to be leading several funding rounds every week and raising more and more money, was replaced by one that was closer to the fundamentals of the company’s business. The fund manager previously wrote to investors earlier this year about how it was redesigning its risk systems after its flagship public equity hedge fund suffered a 56% loss, comparing the firm’s rebound from losses to golfer Rory McIlroy’s Masters victory.
Recent private equity fund PIP 16 has reaped some benefits from a style that focuses on “high-conviction” bets. The letter said the fund has invested 70% of its assets in 25 companies, with the largest 10 companies accounting for three-quarters of the total.
These big bets include some of the world’s leading artificial intelligence companies, including OpenAI and Waymo.
