HONG KONG • Hillhouse Capital Group, the Chinese investment firm, raised US$10.6 billion (RM43.88 billion) for its third and largest buyout fund, as money pours into the private equity industry from investors seeking higher returns than volatile markets offer.
The fund, the world’s third-largest private equity raising completed this year, will seek opportunities in healthcare, consumer, technology and services industries, Hillhouse said in a statement yesterday. The fund was “heavily oversubscribed”, the firm said. Its initial target was about US$6 billion, people familiar with the matter said earlier this year.
A total of 671 private equity funds have raised US$255 billion this year, after a record US$453 billion was collected in 2017, Preqin said in a report earlier this month. The industry is now faced with the challenge of deploying more than US$1 trillion in capital when competition for deals is intensifying, pushing prices higher.
At the same time, global trade tensions and the end of ultra-easy central bank policy has roiled stock and bond markets, sending investors looking for alternatives.
In the only larger fund raisings this year, Carlyle Group LP garnered US$18.5 billion for a US-focused fund targeting aerospace, defence and government services, and Swedish buyout firm EQT Partners AB collected more than US$13 billion. That means the Hillhouse fund is the largest Asia-focused pool that has completed raising capital this year.
Hillhouse was founded in 2005 by Yale University alumnus Zhang Lei (picture) with an initial US$20 million from his alma mater’s endowment fund. He has parlayed that into the more than US$50 billion in assets the firm manages today.
For the new fund, Canada Pension Plan Investment Board committed US$300 million as of March, according to its website. San Francisco Employees’ Retirement System pledged US$100 million, and Texas County and District Retirement System contributed US$85 million.
“We are deeply grateful for the ongoing trust of our partners,” Zhang said in the statement. “We look forward to working with innovation-minded, world-class businesses and management teams seeking to deploy technology-driven solutions to create value for all stakeholders.”
The new fund has the flexibility to invest globally, but will focus on Asia-related deals. It will invest in start-ups and help traditional companies get back on the growth track through digitalisation, the statement said.
Hillhouse participated in more private equity purchases in Asia Pacific last year than any other investment firm, racking up US$26 billion of transactions, according to data compiled by Bloomberg.
Global Logistic, Qihoo
An investor group including Hillhouse and Hopu Investment Management agreed last year to buy Singapore- based warehouse operator Global Logistic Properties Ltd for about S$16 billion (RM49.68 billion).
That deal surpassed the 2016 takeover of Qihoo 360 Technology Co as the largest-ever buyout of an Asian company, Bloomberg data show.
Hillhouse teamed up with CDH Investments in 2017’s US$6.8 billion buyout of Belle International Holdings Ltd, the biggest women’s footwear retailer in China. It was also an early investor in Chinese cancer drug developer BeiGene Ltd, now worth US$9.5 billion, and electric-vehicle maker NIO Inc, which is valued at US$7.9 billion.
The firm was also an early backer of Tencent Holdings Ltd, the Shenzhen- based Internet giant that operates the ubiquitous WeChat messaging service and Chinese e-commerce operator JD.com Inc.
Hillhouse’s investments outside Asia include cloud commerce platform Magento Inc, Uber Technologies Inc and video-conferencing outfit Zoom Video Communications Inc.
The investment firm has been beefing up its executive ranks recently, with Mervyn Chow, who was Credit Suisse Group AG’s most senior China banker, joining in a high-level senior role in March.