Biggest China-focused, China-based Private Equity Fund of all Time is on the Road

by Yong Xiang Pua

  • 02 Dec 2011
  • PE

Following Hony Capital RMB Fund II’s final close of CNY 10bn earlier in May, buyout-specialist Hony Capital is back on the fundraising road with its fifth USD-denominated private equity vehicle. Hony Capital Fund V predominantly targets China-focused buyouts, but may also make opportunistic investments in US and Europe-based companies. If successful, the $2.6bn vehicle will be the largest China-focused vehicle ever raised by a fund manager based in China, excluding Hong Kong.

The current largest China-focused fund ever raised by a China-based fund manager is Hopu Investment Management’s Hopu USD Master Fund I. The $2.5bn buyout fund, which invests in both state-owned companies and unlisted companies, exceeded its initial target size of $2 bn in 2008. Notable investors in the fund include Temasek Holdings, Daiwa Securities Group and Goldman Sachs Private Equity Group.  

The next largest China-focused vehicle is CDH China Fund III. The vehicle successfully raised an aggregate $1.6bn in 2007. Managed by CDH China Management Company, the fund invests in various sectors within China. CDH China Management Company had since raised both USD and CNY-denominated vehicles, of which its most recent vehicle, CDH China Fund IV, closed in 2010 at nearly $1.5bn. CDH China Management Company, which has garnered $4.7bn worth of commitments in the past ten years, is also the largest China-based private equity firm by aggregate capital raised.

 Fundraising by Greater China-based private equity fund managers has reached new heights since 2006. Preqin’s data shows that with less than a month to the end of 2011, fund managers based in the region have already raised an aggregate $21.4bn for the year, topping the previous high of $18.9bn in 2008. Going forward, Greater China-based fund managers are looking to raise another $39.7bn through 89 vehicles, of which China-based fund managers are seeking $21.8bn in aggregate capital.

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