Discretion the better part of valour

Epartners has given back its e-money. The firm has decided it cannot invest $520m of the $650m fund it raised for internet companies last July and will return it to investors including Morgan Stanley and Softbank.

Epartners is returning most of its fund to investors. The move could put pressure on other venture capitalists with large funds for internet investments to follow suit.

The Epartners2 fund will return $520m to investors including Morgan Stanley and Softbank. That leaves $130m, which the firm believes will be enough to support its existing investments.

Epartners is the venture capital arm of Rupert Murdoch’s News Corp and was created in 1999 to take advantage of the burgeoning internet opportunity.

In a statement explaining Epartners’s decision, managing director Mark Booth, said that there was too much money chasing less and less opportunity and that he didn’t believe he could put the capital to good use.

Epartners has decided discretion is the better part of valour and its move may encourage other venture capital fund managers holding uninvestable capital to realise the best shareholder value they can by giving it back.

Whilst the IT infrastructure and biotech sectors continue to draw in money for VCs such as Atlas Venture, which this week closed a $950m fund, internet investments are now shunned.

News Corp invested $100m in Epartners1 and had earmarked a further $250m for Epartners2 second fund. The move is the company’s second retreat from internet investing – earlier this year it closed eVentures, a joint venture with Softbank that aimed to introduce American internet thinking to Europe.