Hony Capital, a China-based buyout fund manager, has this week successfully raised its fifth USD-denominated fund, Hony Capital Fund V, garnering $2.37bn from investors. This makes it the second largest vehicle with a predominant focus within Greater China in history. The sector-agnostic fund will mainly target mid-market buyout opportunities in China; however it may also invest selectively in foreign companies that seek to enter the Chinese market, especially those that will add value to the target industries.
In recent times, there have been an increasing number of mainland China-based fund managers raising private equity funds. In 2011, 53 funds managed by such managers were closed with an aggregate value of over $18.6bn. Now that its fundraising efforts have ended, Hony Capital Fund V is also ranked as the second biggest fund raised by a mainland China-based fund manager in history. The fund is only beaten in size by China-based Hopu Investment Management’s Hopu USD Master Fund I, a $2.5bn China-focused buyout vehicle, which held a final close in 2008.
Widening the scope to include vehicles raised by fund managers based in the Greater China region, Hony Capital Fund V ranks fourth largest. Baring Asia Private Equity Fund V, a growth fund managed by Hong Kong fund manager Baring Private Equity Asia, takes the position before Hony Capital Fund V with $2.5bn. Closed in 2011, Baring Asia Private Equity Fund V is a pan-Asia fund that includes Greater China, India, Japan, South Korea, Singapore and other Southeast Asian countries within its investment focus. Hopu USD Master Fund I is the runner-up, while Affinity Asia Pacific Fund III leads the list with a close value of $2.8bn in 2007. Affinity Asia Pacific Fund III is managed by Hong Kong-based Affinity Equity Partners, and focuses primarily on opportunities in Asia and Australasia.
There are currently 95 private equity funds on the road seeking capital that have an exclusive focus on investment within Greater China, targeting an aggregate $35.6bn from investors.