General Atlantic’s Dzialga: Firm to expand China portfolio

General Atlantic is preparing to ramp up its investment efforts in China, Managing Director Mark Dzialga said at Columbia Business School’s private equity conference on Friday.

“Some of the best, best opportunities are going to be outside the U.S.,” he said. “I think our business in China will be bigger, 10 years from now, than it will be in the U.S.”

General Atlantic’s website shows it completed three deals in China last year, picking up stakes in Kaiyuan New Century Hotel Group, PE firm Ocean Link and Fang.com, a real estate e-commerce and marketing site.

“PE is an incredibly respected source of capital” in China, he said. “It’s heading in the right direction. People are saying, ‘These are good people to be in business with.’”

General Atlantic’s interest in China, as well as India, dovetails with investment themes its deal teams have started to cover in the technology sector, Dzialga said.

Network-based business models, artificial intelligence, software robotics, cloud computing and digital advertising are among the tech trends General Atlantic is following, according to his slideshow. Shifting demographics will encourage similar disruptions, he said.

“They’re incredibly young populations,” he said. “When you have these young populations, these incredibly disruptive things happen. Young people want very different things from what people [my age] want.”

In his remarks, Dzialga noted that General Atlantic had turned down early opportunities to invest in Facebook and Amazon, both of which are now among the largest tech companies, in part because of the generational gap between those company’s users and the experiences of General Atlantic’s investment committee.

Acknowledging that gap, and recognizing the opportunities younger entrepreneurs offer, is increasingly part of the firm’s thesis.

“The guys in China, when I go there, are extremely interested in driving and determining what consumer preferences are,” he said.

General Atlantic’s portfolio of internet and technology companies includes Snapchat parent Snap, which recently raised $3.4 billion in its initial public offering, as well as BuzzFeed, Uber and Vox Media.

General Atlantic invests through evergreen fund structures. As they’re not bound by traditional fund terms, the firm’s growth investments typically come with longer time horizons — which it dubs “patient capital.”

The firm had $19.6 billion under management as of June 30. General Atlantic has 11 offices across North America, South America, Europe and Asia.

Action Item: More about General Atlantic: www.generalatlantic.com

Mark Dzialga describes investment trends General Atlantic is tracking, at Columbia Business School’s PE/VC Conference on March 3, 2017. Photo by Sam Sutton, Buyouts.