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May 31, 2017  

Venture-Capital Offering a Big Hit for Coatue

Coatue Management is raking in even more money than expected for its latest venture-capital offering.

The $10 billion firm, better known for its long/short equity hedge fund, began marketing the third in a series of venture-capital vehicles late last year with a $1 billion fund-raising target. Now comes word that Coatue expects to hold a second and final close around June 30 with $1.5 billion. That would make the vehicle, Kona 3, twice as large as its predecessor, Kona 2, and more than four times as big as Kona 1, measured by the total amounts of capital raised.

In an email last week to clients and prospective backers, Coatue said it held a first close for Kona 3 at the end of the first quarter with $500 million from “families and institutions.” Since then, the New York firm apparently has fielded another $1 billion of commitments.

Kona 3 presumably will take a similar approach to investing as the first two funds in the series, which targeted mid-stage technology companies focused on mobile applications, cloud computing, social networking and internet opportunities in China. But unlike the predecessor vehicles, Kona 3 would be “stage agnostic,” indicating it could invest in businesses throughout the tech-startup life cycle.

As was the case with Kona 2, investors in the new fund will have the option of parking any uncalled capital in Coatue’s flagship hedge fund, which was up 14% year-to-date at the end of April.

In its email last week, Coatue noted that a major holding of Kona 2, Didi Chuxing, acquired Uber’s China business last year and now controls 95% of the Chinese ride-share market. The fund’s assets were up to $1.1 billion at yearend 2016.

Coatue is led by Philippe Laffont, a protege of Tiger Management founder Julian Robertson. Laffont’s brother, Thomas Laffont, oversees the venture-capital business from an office in Menlo Park, Calif.

Coatue is among a handful of technology-focused hedge fund managers including Tiger Global that also pursue venture-capital investments. ?