HONG KONG: Private equity firm Hillhouse Capital Group is raising a fund targeting over 20 billion yuan ($3 billion), said people with knowledge of the matter, as it readies itself for opportunities offered by the eventual normalization of the Chinese economy.
Hillhouse formally began fundraising for its largest-ever yuan fund in recent months, said one of the people. It is unclear when the fundraising will close but typical time frames are six months to over a year. Details of the fund are reported here for the first time.
The move underscores a revival in private equity fundraising momentum in Asia, after new funds raised focusing on the region dropped to a seven-year low in the first half of the year, as buyout firms scrambled to pare exposure to virus-hit portfolios.
So far in July-September, only a little over $6 billion has been raised for Asia-focused funds, compared with the quarter’s five-year average of $46 billion, data from Preqin showed.
However, top private equity firms’ track record of landing big-ticket merger-and-acquisition deals and steady returns for their investors hunting yields in a low interest rate environment are helping to revive fundraising activity.
Hillhouse is also raising what would be Asia’s largest US dollar-denominated fund targeting $13 billion, said separate people with knowledge of the matter.
The dollar fund, the firm’s fifth, will comprise about $1 billion for venture investment, $2.5 billion for growth-stage companies and the rest for buyout deals, said two of the people.
Hillhouse’s fundraising follows US-based KKR & Co, which has raised more than $11 billion for its latest Asia fund. Its target is $12.5 billion, sources have said. Founded in 2005 by Chinese rainmaker Zhang Lei with seed funding from a Yale University endowment, Hillhouse is known for early investments in Chinese tech giants.