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Chinese private capital is aiming for a record fundraiser

Chinese private capital is aiming for a record fundraiser

China’s private equity funds are aiming for a record fundraiser this year as global investors increase their exposure to the country despite increased tensions in the U.S. and regulatory scrutiny by its technology groups.

A group of fast-growing Chinese investment funds, including Boyu Capital and Primavera Capital Group, are expected to be the largest U.S. dollar funds in recent weeks.

Boyu, led by the grandson of former Chinese President Jiang Zemin, is targeting a new $ 6 billion fund, according to several people close to the planet. Primavera said Fred Hu, a former China chairman at Goldman Sachs, is raising a new fund of $ 5 billion, said two people close to the group.

The funds would be the largest and second-largest U.S. dollar funds launched by an independent investment manager in China, according to data provider AVCJ.

Meanwhile, FountainVest Partners, which is targeting the China deal and led by former banker Frank Tang Goldman Sachs, wants to raise $ 3.5 billion for a new fund, according to two people familiar with the plans.

The wave of fundraising comes from China great economic recovery Concerns from Covid-19 and high valuations in public markets.

Similar large regional movements continue this year with more regional and global funds focused on Asia. Baring Private Equity Asia, headquartered in Hong Kong, opened a new $ 8.5 billion fund last month, while Hillhouse Capital, based in Hong Kong, raised $ 13 billion in its largest U.S. dollar fund. is doing.

On Tuesday, the U.S. KKR announced that it had raised $ 15 billion for the fourth Asia-Pacific fund – a record for a regional fund – exceeding the $ 12.5 billion target.

“Asia Pacific companies are being recognized not only as national and regional champions, but also as global leaders in their industry,” said Ashish Shastry, head of private capital at KKR Asia Pacific.

A wealthy Asian investor, a member of one of the region’s most influential families, said China’s domestic PE market is developing very rapidly, especially with US dollar financing. “[Funds’] the bets have started to show a lot of promise and in many cases success, ”the person said.

The fundraiser is a sign of the desire of U.S. and Middle Eastern investors for Chinese companies, especially in the areas of technology and healthcare, according to several people close to the funds.

Although the influx of new capital to China has exacerbated regulatory scrutiny by Chinese technology groups, it could weaken the sector’s outlook, as well as increase sanctions between Washington and Beijing.

“We’ve seen a huge increase in allocation in recent months and we saw an unprecedented dollar basically last year,” said the founder of a large private equity fund in China. “We’re expanding so fast, we’ve even had to ask some of our investors to cut their subscriptions,” he added.

The recent rise in China has more than doubled the average fund size to $ 756 billion compared to $ 415 million in 2020, according to data provider Preqin. In recent years, it has also curb the tendency to reduce capital raising among Asian funds.

But according to a report by the consultancy, fundraising activity fell for the third year in a row in 2020. Asian-focused funds raised $ 90 billion last year, but Bainen said it is 64% lower than the peak in 2017. However, agreements backed by the region’s private capital rose 19 percent in 2020 to a record $ 185 million in 2020, according to Bainen.

Boyu and Primavera were the first investors in Jack Ma’s Ant Group and continued to invest in Chinese technology start-ups.

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