CMGI set to back Asian technology firms

CMGI Inc, a high-profile US-based Internet investment company known for its big bets on Web portals such as Lycos and AltaVista, plans to set up operations in Hong Kong in partnership with Richard Li's Pacific Century Cyberworks, sources say.

The agreement with Pacific Century, which plans to launch a satellite-to-cable broadband Internet business next year, will probably involve co-investing in technology and Internet companies in Asia, as well as plans for CMGI to place its companies in Pacific Century's Cyberport development when the first phase opens in 2001.

Though CMGI-related companies - including the Lycos search engine and e-mail outsourcing company Critical Path - have begun establishing ventures in Asia, CMGI itself has not yet had a presence here.

Both companies declined to comment.

CMGI, listed in the United States, has emerged in the past year as an Internet investment powerhouse, with stakes in publicly listed companies worth US$4.1 billion, and, according to a report by Prudential Securities, stakes in privately held firms worth up to $6 billion.

That includes the AltaVista Web portal business, which CMGI recently acquired from Compaq Computer for $2.3 billion - mostly through a swap of CMGI's high-flying shares. AltaVista could follow the lucrative public offering route already travelled by CMGI investments such as Lycos and Web traffic monitoring company Engage Technologies.

CMGI's NaviSite, a site hosting company, is in the process of going public. CMGI had revenue in its first three quarters of this fiscal year of $122.7 million. Despite losing money, CMGI has a market capitalisation of $7.6 billion. CMGI's minority shareholders include Microsoft, Intel, Compaq and Softbank.

CMGI would probably set up offices in Hong Kong to oversee its investments here, the financial commitment to which would be in millions of US dollars, sources said.

For Pacific Century, which is competing with many other Asian companies for access to good Internet content and technology, linking with CMGI could help it acquire material for the Internet portal it plans to deploy by the first half of next year, and its broadband subscriber business due by the second half.

With its own $100 million investment fund, Pacific Century Cyberworks has taken stakes in local companies such as Outblaze, which helps Internet users set up their own sites.

CMGI has had talks with the Internet division of Sun Hung Kai Properties, according to Roger Luk, an analyst at G.K. Goh, a Hong Kong brokerage.

He said CMGI's deal with Pacific Century Cyberworks gives it access to Pacific Century's potential network subscribers, which some analysts are estimating could in the hundreds of thousands in the first year of operation.

Pacific Century Cyberworks, which last week began an investor roadshow and released a circular announcing its plans, has set its sights on the mainland, Japan and India markets. In the mainland, it faces potential competition from cable operators.

Following comments by Ministry of Information Industry chief Wu Jichuan last week, the company also faces possible restrictions on the amount of investment in mainland Internet firms.

Chairman Richard Li said he was not concerned as Pacific Century Cyberworks usually took stakes of only about 5 per cent in mainland Internet companies.

Pacific Century plans a trial run of its cable TV channel, to be offered free to operators Asia-wide in order to build brand recognition, next month.

US-based Lycos, whose search engine site ranks third behind Yahoo! and Excite in terms of traffic, said it would team up with Singapore Telecom to build localised Web sites in 10 Asian countries, with services in Singapore, the mainland, Taiwan, Hong Kong, Malaysia and India to begin this year.

The 50-50 joint venture, to be called Lycos Asia, includes plans to build Asian versions of Tripod, a 'community' site that allows users to set up home pages and take part in on-line discussions. The sites will have local content and be presented in dominant local languages, according to a statement released by Lycos.

Lycos Asia, with headquarters in Singapore, will be capitalised at US$50 million and SingTel will be responsible for day-to-day management. Massachusetts-based Lycos will provide technical support.

Lycos also has joint ventures in Korea and Japan. Rivals Yahoo! and America Online have also set up localised versions in markets such as the mainland, India and Hong Kong, while Excite has a joint venture in Australia.

Lycos Asia will use SingTel's Internet Exchange, which serves as a hub for 40 Internet service providers, for bandwidth. Other SingTel-related companies will provide postal delivery and e-commerce services.ANH-THU PHAN